Rest assured, your crypto gains – and tax liability – are secure with Howlader and Co. If you’ve bought or sold cryptocurrency between the UK tax year of the 6th April 2020 and the 5th April 2021, you will need to submit a self-assessment tax return by the 31st January 2022. If an individual is a resident of the UK, HMRC considers that any exchange tokens they hold as a beneficial owner are also located in the UK and therefore liable for UK tax. Income Tax is not always applied to airdropped cryptoassets, where these are received in a personal capacity. The question as to whether an individual’s cryptoasset activities amount to a trade or not depends upon several, often complex factors.
For hard forks, where you receive a new coin as a result of a fork – you still won’t pay any Income Tax on receipt of these coins. However, your cost basis from any coins received from a hard fork is derived from your existing tokens from the previous blockchain – not the fair market value of the coin on the day you received it. Again, do make sure to keep records of how much it cost you to acquire your crypto so you can accurately calculate your capital gains and losses later on. Lost crypto is not considered a disposal for Capital Gains Tax purposes as the asset still exists, even if the private key is lost. So, if you’ve lost your private key – you can’t claim this as a capital loss.
Is there a crypto tax in the UK?
Note that it is up to you to work out which tax treatment applies to your activities and report them to HMRC when you need to. If you make a loss on miscellaneous income then the loss can be carried forward to be deducted from miscellaneous income in the future. You do not have any other trading or miscellaneous income in the year. Airdrops are when someone who has a cryptoasset wallet receives some of a certain kind of cryptoasset for some reason.
When the rewards are received, any appropriate expenses can be deducted from this before tax is charged. The use of asset pools can, very quickly, get very complex, especially with a large number of transactions and, or the exchanging of tokens. It may be possible to make a Negligible value claim where you have lost your private key if it can be shown that there is no prospect of recovering it or of accessing the tokens in some other way. This would be for the entire relevant pool and not just individual tokens.
We do HMRC Investigations.
However, the tax treatments can be inherently different, from platform to platform. If there is an acquisition and a disposal on the same day the disposal is identified first against the acquisition on the same day. HMRC confirms that Cryptoassets may be pooled https://xcritical.com/ under section 104 TCGA 1992 subject to the 30-day bed and breakfast rule. Where the assets are equity-linked, reliefs should be considered and where debt-linked, exemptions considered. Note that the position is not at all clear and advice should be sought.
As crypto accountants in the UK, we’re able to advise on the confusing details around the implications of all your crypto activities. Don’t make the mistake of thinking your cryptocurrency activities are exempt from HMRC cryptocurrency regulation uk attention. In our four decades of experience, we’ve seen too many businesses hit hard due to poor tax planning and financial penalties. Blockchain businesses and individual cryptocurrency traders are no exception.
Answering All Your Question of Cryptocurrency Taxation
If you are considering investing in one, you ought to know about crypto tax UK law. We maintain a mixed portfolio of clients ranging from start-ups to £50M. We also provide private client and tax planning services to companies and high net worth individuals. You’ll declare all your crypto taxes in your Self Assessment Tax Return.
The freezing order may remain in place for up to two years but the money can be forfeited by HMRC if they make a successful application for a forfeiture order, again to the civil standard. The court has to be satisfied that the money or part of it is recoverable property or is intended by any person for use in unlawful conduct. Sign up with Moneyfarm today to match with an investment portfolio that’s built and managed to help you achieve your financial goals.