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Interest in cryptoassets has been steadily growing, and we are seeing more and more clients who have cryptoassets as part of their portfolio.

We have a specialist crypto team who are at the forefront of this product.  They are passionate about crypto and can help you understand all of the tax and legislation that may affect you.

HMRC has no specific crypto tax legislation, therefore in the UK, profits are taxed in different ways depending on the actions and circumstances of the taxpayer.

The starting point for determining the tax treatment will be whether you are trading or investing.  HMRC’s view is that, in most cases, individuals hold cryptoassets as personal investments.  When individuals buy and sell cryptoassets, this is usually seen as an investment activity and any gains are potentially subject to Capital Gains Tax.  There is a Capital Gains Tax annual exemption, however, if this is exceeded, tax will need to be paid.

Calculating those gains may not always be straightforward.  Many cryptoassets are traded on exchanges that do not use pound sterling, and it is common to directly exchange one cryptoasset for another.  Swapping Bitcoin for Ethereum or a token will trigger a disposal for Capital Gains Tax purposes even if no actual currency has been received.

If HMRC considers your activities to be a trade, rather than investing, then you will be taxed as if you are running a business and income tax will be due.  Some individuals may also be involved in mining and validating transactions and they will be rewarded for that work by the receipt of fees, or with the allocation of further cryptoassets.  Typically, such rewards will be subject to income tax, but whether that is as trading income or not will depend.  This is a complex area and advice should be sought at an early opportunity.

If you have been involved in investing, trading, arbitrage exchanges or margin trading and you are unsure whether your tax is correct, please do not hesitate to contact one of our experts who can help you or visit one of our offices in Dalston, Dumfries, Penrith or Workington.