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 (this is £3k in 2024-25).
• Gains or losses are calculated based on realised amounts, i.e. you have to convert back into GBP (or another 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 four times the annual allowance, in 2024-25 this is £12k - 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 £12k, you will probably have to report your crypto gains or losses on your self assessment tax return too, 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%).