United Kingdom Cryptocurrency Laws and Regulation

Since no assets are acquired on the same day/within 30 days after the disposal, neither the same day nor the “bed and breakfasting” rule apply in this case. The section 104 pool would be applicable to calculate the cost basis in this case. How much you must actually pay in taxes will be shown after you have completed the Self Assessment.

Crypto exchanges and day traders are taxed in Malta, falling under the general corporate income tax rate of 35%. Portugal is another EU nation without specific cryptocurrency taxation laws. The crypto tax you’ll have to pay is determined by the specific transactions you make with your cryptocurrency.

How are airdrops being taxed?

Selling your crypto for another crypto is a disposal – so it’s subject to Capital Gains Tax. You may recall that Coinbase provided data on UK customers who transacted more than £5000 in cryptocurrency between 2017 and 2019 in 2020. Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions.

This means you should report the interest received as miscellaneous income on your tax return. If mining is done as part of a business, the crypto assets will be traded as stock. If they are transferred out of trading stock, the company will be treated as if they purchased the cryptocurrency at the value used in the trading accounts.

Calculating your crypto taxes using crypto tax software

Don’t worry, you won’t have to pay tax on the entire amount when you sell something. You’ll only be taxed on cryptocurrency gains, Crypto Taxes in the United Kingdom so whenever you make a profit. In the UK, cryptocurrency mining and liquidity mining are considered to be taxable activities.

The very nature of cryptoassets is that they are decentralised and digital in nature and do not have a physical location or exist anywhere. However, determining the location or ‘situs’ of assets is important for tax purposes and particularly for UK residents, non-UK domiciles as it can change the tax consequences dramatically. Here are answers to frequently asked questions about crypto taxes in the United Kingdom. Syncing your transaction history from all exchanges in a crypto tax calculator is one way to keep track of all of your data over multiple years with automated formatting in an organized fashion. If you bought Bitcoin for £20,000 and sold it for £30,000, your capital gain would be £10,000 (£30,000 – £20,000).

Guide to Crypto Taxes in the UK

Instead, the cost basis is calculated using the costs of the new tokens bought. This is done by considering all purchases on the same date – even if the acquisition has happened before you dispose of the asset. In some instances, you may also need to pay National Insurance contributions. So, if you exchange Bitcoin for Ether or another cryptocurrency, you’ll have to pay Capital Gains Tax.

If you made a profit when disposing of your crypto, you have made a capital gain and you must pay Capital Gains Tax on that gain. If you instead made a loss, you have made a capital https://www.tokenexus.com/ loss on that transaction and you do not pay Capital Gains Tax. However, it’s important to keep track of your capital losses since these can be used to offset your capital gains.

Gifting cryptocurrency

If you run a business that involves cryptocurrency transactions, the rules become more complicated. Calculating your crypto taxes and reporting them to HMRC takes time, especially if you trade in large quantities. 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. You must file your taxes for the current fiscal year by January 31, 2022.

• Also, you may be subject to capital gains/losses when you dispose the crypto rewards.
• Keep in mind that when you sell this cryptocurrency, you will be subject to Capital Gains Tax.
• You are allowed to include any appropriate expenses to reduce the net income amount.
• Because of this, HMRC does not consider the misplacing of private keys a disposal that triggers Capital Gains Tax.
• There is extremely small guidance on Liquidity Pools and other DeFi protocols at the moment.