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ARE YOU CONFIDENT IN ACCURATELY REPORTING CRYPTOCURRENCY EARNINGS ON YOUR TAX
RETURNS?

Yes, I'm confident
No, it's challenging
I use an accountant
I haven't reported yet


FILING YOUR CRYPTO TAXES IN THE UK

Tax filing can be a time-consuming and confusing task even for the savviest
investors. Learn how to simplify and speed up the process here.

Chandan Lodha

15 dicembre 2022  ·  3 min read

Cryptocurrency Tax Filing in the UK

Tax filing can be time-consuming and confusing, even for the savviest investors.
Ensuring your “regular” taxes, such as income tax, are filed correctly, and all
up to date can be an arduous process, let alone the unknown and new world of
cryptocurrencies and their taxation requirements. As a highly-established
company in the crypto tax space, the team at CoinTracker are here to help.


COINTRACKER – A UNIVERSAL APPROACH & THOUGHT LEADER

Whether you are a seasoned crypto investor or are entirely new to the industry,
we can help. Regardless of the size of your investments and experience, crypto
tax filing can be stressful and create uncertainty. A user-friendly and seamless
platform is essential to alleviating these pain points.

CoinTracker is the global leader in cryptocurrency tax, and we are committed to
improving awareness and education on the taxation of this exciting asset class.
Figuring out how to approach crypto tax requirements can be daunting, so our
objective is to make this a simple and hassle-free process for all our
customers. We want to assist and encourage more people to enter the world of
crypto, knowing that they can confidently embark on this journey knowing that
the portfolio tracking and taxation elements of their investments are taken care
of.


A GUIDE TO FILING YOUR CRYPTO TAXES IN THE UNITED KINGDOM

Every country has different rules and regulations for filing taxes related to
cryptoassets. It’s still early days for cryptocurrency taxation in the United
Kingdom. This simple guide will help you remain compliant when filing your taxes
and ensure you maximize cost efficiencies throughout your tax return.

In the UK, His Majesty’s Revenue and Customs (HMRC) do not consider
cryptocurrencies a form of money or currency. Instead, they are classed as an
asset, just like property or shares owned in a company. As a result, investors
would be subject to Capital Gains Tax (CGT) when selling their cryptocurrencies.
Most crypto investors will qualify for CGT; however, for those involved in high
volume or day trading, the HMRC would instead require Income Tax to be paid on
trading.


CAPITAL GAINS TAX

This is what will apply to the majority of investors. With a Capital Gains
allowance of £12,300 (£6,000 starting April 2023), any profits under this amount
will be exempt from taxation. However, if you sell your cryptocurrency for cash
or swap it for another cryptocurrency, and the total profited amount is above
£12,300, you will be liable for tax.

You will need to fill out a Capital Gains Tax summary form along with your tax
return and disclose your profits by calculating the amount you sold your
cryptocurrency for minus any costs associated with purchasing it. This would
include purchasing the cryptocurrency itself along with any transaction fees.
The amount of Capital Gains Tax you pay will depend on your Income Tax band. For
example, someone on a Higher Rate income tax band (over £50,270) would have to
pay Capital Gains Tax at 20% (after deducting the £12,300 tax-free allowance).
In the case of someone earning £75,000 in annual income who makes £20,000 in
profit from selling their cryptocurrency, they would pay 20% tax on (£20,000 -
£12,300) £7,700.


INCOME TAX

If you are a cryptocurrency trader and earn cryptocurrency in the UK, you will
need to pay Income Tax and National Insurance in the same way as if you were
paid in pounds sterling.

The first £12,570 you earn in a financial year is free of tax; anything above
this will be subject to income tax. This means if you receive payment from your
employer in cryptocurrency, mine it, receive interest/yield or staking rewards,
those earnings will fall into the Income Tax category. The next step would be to
check what proportion of your cryptocurrency would be considered income by HMRC
and then calculate the Fair Market Value (FMV) of your cryptocurrency income.
CoinTracker’s tax calculator is a valuable and speedy tool for calculating this.
The FMV would be the amount your crypto would have been worth on the day you
received it. With this pound sterling figure established, you can then calculate
the rate of tax you should pay based on the band you fall into (Basic Rate,
Higher Rate or Additional Rate).


SIMPLIFY THE PROCESS WITH COINTRACKER TODAY

Whilst cryptocurrency taxation is a relatively new concept in the United
Kingdom, it is crucial to understand the tax implications and stay up to date
with the rules and regulations outlined by HMRC. The amount of tax you pay will
depend on whether you fall into the Income Tax or Capital Gains Tax category.
The actual amount you pay will depend on your income tax band alone (allowing
for your tax-free allowance of £12,300). At CoinTracker, we fully understand the
ins and outs of crypto taxation, so let us do the hard work to simplify and
speed up the process for you.

Check out our comprehensive guidance on UK crypto tax for deeper insight into
HMRC’s crypto rules. Let us know your questions and feedback on Twitter
@CoinTracker.


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