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Keeping up with crypto: the tax implications

Crypto Taxes in the United Kingdom

If you are mining as a business, your mining income will be added to trading profits and be subject to income tax. As a result, claiming capital losses can significantly reduce your tax liability, and even bring your total taxable gains below the tax-free allowance amount of £12,600. Looking for an easy way to generate a comprehensive crypto tax report with records of all of your transactions?

Calculating capital gains and losses is actually not so complicated if you only have a few transactions. However, if you have hundreds if not thousands of transactions spread on different exchanges and wallets, things start to become a lot more complicated. Have you either invested in or traded cryptocurrency during the last year and now wonder if you need to pay any taxes on your crypto in the United Kingdom? Her Majesty’s Revenue and Customs (HMRC) has published guidelines and a Cryptoassets Manual detailing how cryptocurrencies are taxed in the UK.

Other forms of crypto taxes in the UK

Unlike many other countries, the United Kingdom does not have separate rates for short-term and long-term capital gains. The amount of Capital Gains Tax you will pay is determined by your earnings. When it comes to capital gains, HMRC is quite generous, providing every UK taxpayer with a Capital Gains Tax Allowance of £12,300.

Most crypto tax calculators like Coinpanda do this automatically for you. This means that the loss can be used to offset your total capital gains Crypto Taxes in the United Kingdom if the claim is approved by HMRC. Tax rules for cryptocurrency earned from staking are in fact identical to cryptocurrency received from mining.

Capital Gains Tax allowances

In this example, Coinsmart has no way of knowing Mark’s cost basis of his 1 BTC. They have no idea when, for how much, or where that BTC was originally acquired. In the United Kingdom, the exchange of cryptocurrencies for traditional currency is not subject to Value Added Tax (VAT). Say your annual income is £50,000, and you’ve made a gain of £13,000 from selling Bitcoin.

Crypto Taxes in the United Kingdom

To potentially pay less tax in January 2023, you must make your move before the end of the fiscal year, which is April 5, 2022. The UK fiscal year runs from April 6th to April 5th of the following year. So the fiscal year you’ll be reporting on runs from April 6, 2020 to April 5, 2021.

If you buy and sell tokens of the same type

While trying to hide your cryptocurrency from the HMRC is a bad idea, savvy investors use legal tax strategies to save money. We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through the Live Chat. Coinpanda supports more than 500+ exchanges, wallets, and blockchains today.

Crypto Taxes in the United Kingdom

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