Crypto currencies - Quick Overview

  • Crypto gains are usually treated like capital gains. This means they are taxed at 20% for gains over the annual exempt amount of £12k. 
  • Gains or losses are calculated based on realised amounts, i.e. you have to convert back into GBP (or other FIAT currency) in order to make an official gain or a loss.
  • You have to report your crypto trading to HMRC if your total proceeds from crypto investing (and/or other capital gains) are more than £48k per year - even if you haven’t made a taxable gain or loss! For example, if you sell a house during the year, meaning that your total proceeds from other capital gains are likely to be greater than £48k, you will probably have to report your crypto gains or losses on your self assessment tax return, even if they are not taxable. 
  • If you have realised a crypto loss it is important to report this on your self assessment tax return, as you’ll be able to carry forward these losses to offset against potential future profits.
  • Generally, your crypto gains or losses will be treated as capital and you will pay capital gains tax (“CGT”). However, if you meet the conditions of being a professional crypto trader, you might pay tax at the income tax rates which are higher than the CGT rates (income tax rates go up to 45%). 

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