The rapid growth in cryptocurrency and distributed ledger technology has seen an influx of new cryptocurrency business, traders and investors which has attracted significant attention from HMRC. In order to ensure that your tax is correct, you need to understand the particular tax treatment of cryptocurrency.
In broad terms, the tax treatment of cryptocurrency follows the underlying activity in which cryptocurrency is being acquired or sold. As such, crypto investors and traders must consider the wide degree of transactions ranging from basic purchase and sell orders to hard forks, airdrops, staking and the like.
If you are not a tax resident in the UK or do not have a domicile in the UK then you can benefit from favourable tax rules.
As with many investment and trading activities it is wise to consider the tax treatment of proposed transactions properly, as this can usually save time and money later on.
If you would like help with assessing your crypto tax liability, reporting it on a self-assessment tax return and/or general advice on taxation of cryptocurrencies, please do contact us.
Crypto tax returns can be time consuming and complex and our fees start from £4,500 plus VAT.
Taxation of cryptocurrency is made more complicated as the industry develops with emerging unique and complex crypto activities such as gaming and gambling platforms, and the evolution of non-fungible tokens and hybrid tokens used for specific purposes.
Whether you are an established NFT investor or artist, you are just starting out, you have already earned substantial sums with your CryptoKitties or you are about to start playing Axie Infinity or The Six Dragons and have big plans, ETC Tax can help.
We work with clients to help them understand the tax liabilities arising as a result of their previous crypto activities, as well as advising on their filing obligations with HMRC, before helping them make a full and thorough disclosure.
We ensure that any uncertainties or queries are addressed and pre-empt any possible enquiries by HMRC.
If you are not looking for specific help right now; you can find out more in our Knowledge Centre or check out these other up to date resources from ETC Tax Consultant, Andy Wood.
Cryptocurrency and Other Digital Assets – Tax Law and Practice is a great option for those advising clients on crypto taxes or those who are heavily involved in the space. Published by Claritax Books, it can be purchased here.
Crypto Tax Degens (https://cryptotaxdegens.com/) is a fantastic source of information for crypto tax enthusiasts of all persuasions. With great up to the minute content delivered in a user friendly way, this is a great place to ‘meet’ like–minded individuals.
Our client had approached us with numerous files and blocks of data from different wallets, blockchains and platforms. They had been actively trading and staking cryptocurrency and needed to report this to HMRC.
They needed assistance in calculating the income and capital gains that were reportable. The tax rules surrounding crypto and digital assets are complex, not to mention the difficulties on how to transform the data into a readable format that was suitable to present to HMRC.
Due to our expertise, we were able to thoroughly review the data, collating all the transactions and ensuring each was correctly identified and matched according to the UK tax share-pooling rules. This included producing a supplementary report, outlining the total capital gains and income that was reportable.
In addition, we were able to advise on a significant negligible value loss claim available to our client which enabled them to reduce their tax bill, in line with legislation.
By having a trusted professional tax adviser on board, the client had certainty that their income and gains had been reported correctly, and they were able to maximise the reliefs available to them.
Yes. If you’ve sold, traded, staked, mined, or earned crypto in any way, even from NFTs or blockchain games, you may have a UK tax liability. We help you understand what needs to be reported and how to do it properly.
UK tax treatment depends on your specific activity, capital gains for disposals and income tax for mining, staking, or payments in crypto. We assist with organising your data, applying share-pooling rules, and producing accurate reports for HMRC.
If you missed reporting in earlier tax years, we can help you make a full disclosure to HMRC. Proactively addressing the issue can help minimise penalties and resolve any uncertainties before an enquiry is opened.
NFTs and in-game digital assets may be subject to capital gains or income tax depending on how they’re used or sold. We help NFT investors, artists, and gamers understand the tax treatment of earnings and transactions.
Yes. If you are not UK tax resident , you may benefit from more favourable tax rules,. We’ll review your situation and guide you on what applies to your specific case.
