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How is Crypto Taxed in the UK 2023: An In-depth Guide



Cryptocurrency taxation is a complex and evolving area, especially in the UK. As of 2023, the UK's HM Revenue and Customs (HMRC) has provided clear guidelines on how crypto assets are taxed. This article will delve into the specifics of crypto taxation in the UK for the year 2023.


How is Crypto Taxed in the UK


Cryptocurrency Is Taxable in The UK

Yes, cryptocurrency is taxable in the UK. HMRC has made it clear that crypto may be subject to both Capital Gains Tax and Income Tax depending on the specific transaction. For capital gains from crypto over the £12,300 tax-free allowance, you'll pay 10% or 20% tax. For additional income from crypto over the personal allowance, you'll pay between 20% to 45% in tax. The exact amount you'll pay will depend on the transaction you've made, the tax that applies, and the Income Tax band you fall into.


Changes in 2023

In its Autumn Treasury Statement, the UK government announced that the Capital Gains Tax (CGT) allowance of £12,300 would be cut to £6,000 from April 2023. This means that the tax-free allowance for capital gains will be significantly reduced.


HMRC's Ability to Track Crypto

HMRC has a data-sharing program with all UK exchanges and has crypto transaction data from as far back as 2014. HMRC also has the Know Your Customer (KYC) information you provided when signing up for any UK exchange or wallet. This means that HMRC can track cryptocurrency transactions and is using this information to remind crypto investors to report their crypto and pay their taxes.


Tax-Free Crypto Transactions

Not all crypto transactions are taxable. Transactions that are tax-free include buying crypto with GBP, holding (HODLing) crypto, transferring crypto between your own wallets, donating crypto to charity, and gifting crypto to your spouse.


How Crypto is Taxed in the UK

There is no specific Bitcoin tax or cryptocurrency tax in the UK. Instead, your crypto will either be subject to Capital Gains Tax or Income Tax. The crypto tax you'll pay depends on the specific transactions you're making with your crypto. If you're seen to be making an income, you'll pay Income Tax. If you're seen to be making a capital gain, you'll pay Capital Gains Tax.


Crypto Capital Gains Tax

HMRC sees crypto as a capital asset, so when you dispose of a capital asset, you'll pay Capital Gains Tax. Disposals of crypto include selling crypto for GBP or another fiat currency, trading crypto for crypto, including stablecoins, spending crypto on goods and services, and gifting crypto unless it's to your spouse or civil partner.


Crypto Income Tax

There are cases where crypto is treated as income and thus attracts Income Tax. Cryptocurrency transactions that are classified as income are taxed at your regular Income Tax band. In some instances, you'll also need to make National Insurance contributions on income from crypto too. In the UK, crypto is taxed as Income when it comes from getting paid in crypto, staking rewards, mining tokens, and airdrops.


In conclusion, the taxation of crypto in the UK can be complex and subject to change. It's essential to keep detailed records of your crypto transactions and consult with a tax professional if you're unsure about your obligations. As of 2023, both Capital Gains Tax and Income Tax may apply to your crypto transactions, and the tax-free allowance for capital gains will be reduced.



Do You Need to Pay Tax When You Receive Crypto Assets?

The world of cryptocurrency is complex and ever-evolving, and with it comes a myriad of questions, especially when it comes to taxation. This article aims to shed light on whether you need to pay tax when you receive crypto assets.


Receiving Crypto Assets as Income

Any cryptoasset exchange tokens, also known as cryptocurrency, that you receive from employment or mining are considered income. If you receive tokens as income, you are required to keep records and may need to pay Income Tax and National Insurance contributions. However, it's important to note that you do not need to pay tax on tokens when you buy them, but you may need to pay tax when you sell them.


Tokens from Mining

If you receive tokens from mining and are not trading, the tokens will be treated as other taxable income. You will need to complete a Self-Assessment tax return in pound sterling unless you've received cryptoassets worth less than £1,000 or less than £2,500 from other untaxed income.


Tokens as Payment from an Employer

If an employer pays you in tokens, you need to check if the tokens you're paid are classed as readily convertible assets (an asset that can be easily exchanged for cash). If your income is a readily convertible asset, UK employers must pay your Income Tax and National Insurance contributions through PAYE before they pay you. They will estimate the value of the tokens, and pay Income Tax and National Insurance contributions based on the estimate. They'll then deduct tax and contributions from other wages you receive in that period.


If you're paid in tokens only or if they cannot deduct the full amount from your other wages, your employer will pay Income Tax on your behalf. If they pay tax on your behalf, you should reimburse them within 90 days of the end of the tax year.


If your income is not a readily convertible asset, you should ask your employer if they've paid your Income Tax through PAYE. If they have not, you'll need to pay it yourself. To pay your own Income Tax, complete a Self-Assessment tax return in pound sterling.


Record Keeping

You must keep separate records for the tokens you receive, including the type of tokens, the date you received them, the number of tokens you received, the number of tokens you have in total, their value in pound sterling, and bank statements. You should also record the date you disposed of the tokens. You may also want to keep other records such as wallet addresses. HMRC might ask to see your records if they carry out a compliance check.

In conclusion, the tax implications of receiving crypto assets can be complex and vary depending on the circumstances. It's always advisable to keep detailed records and consult with a tax professional if you're unsure about your obligations.


Do You Need to Pay Tax When You Sell Crypto Assets



Do You Need to Pay Tax When You Sell Crypto Assets?

The taxation of crypto assets is a topic that often raises questions, particularly when it comes to selling these digital assets. This article aims to provide clarity on whether you need to pay taxes when you sell crypto assets.


Disposing of Crypto Assets

When you dispose of crypto asset exchange tokens, also known as cryptocurrency, you may need to pay Capital Gains Tax. This tax is applicable when your gains from selling certain assets exceed the tax-free allowance. It's important to note that you might need to pay other taxes if you receive cryptoassets.


When to Check for Capital Gains Tax

You might need to pay Capital Gains Tax when you sell your tokens, exchange your tokens for a different type of crypto asset, use your tokens to pay for goods or services, or give away your tokens to another person (unless it’s a gift to your spouse or civil partner). If you donate tokens to charity, you may need to pay Capital Gains Tax on them.


Calculating Your Gain

To check if you need to pay Capital Gains Tax, you need to work out your gain for each transaction you make. Your gain is normally the difference between what you paid for an asset and what you sold it for. If the asset was free, you’ll need to use the market value when working out your gain. You do not need to pay Capital Gains Tax on the value of the tokens that you’ve already paid Income Tax on. However, you'll still need to pay Capital Gains Tax on the gain you make after you’ve received them.


Allowable Costs and Pooled Costs

You can deduct certain allowable costs, including a proportion of the pooled cost of your tokens when working out your gain. Allowable costs include transaction fees paid before the transaction is added to a blockchain, advertising for a buyer or seller, drawing up a contract for the transaction, and making a valuation so you can work out your gain for that transaction. You cannot deduct costs you’ve already deducted against profits for Income Tax or costs of mining activities.


You must group each type of token you own into pools and work out a pooled cost for each type. When you sell tokens from a pool, you can deduct an equivalent proportion of the pooled cost (along with any other allowable costs) to reduce your gain.


Reporting and Paying Capital Gains Tax

If your total taxable gain is above the annual tax-free allowance, you must report and pay Capital Gains Tax. You can either complete a Self-Assessment tax return at the end of the tax year or use the Capital Gains Tax real-time service to report it straight away.


Record Keeping

You must keep separate records for each transaction, including the type of tokens, the date you disposed of them, the number of tokens you’ve disposed of, the number of tokens you have left, their value in pound sterling, and bank statements and wallet addresses. You should also record the pooled costs before and after you disposed of them. HMRC might ask to see your records if they carry out a compliance check.


In conclusion, the tax implications of selling crypto assets can be complex and vary depending on the circumstances. It's always advisable to keep detailed records and consult with a tax professional if you're unsure about your obligations.


Operating PAYE for Employees Paid with Crypto Assets

As cryptocurrencies become more mainstream, some employers are considering paying their employees with these digital assets. This article provides guidance on how to operate PAYE (Pay As You Earn) if you pay your employees with assets that can be sold or cashed in, like cryptoassets.


Non-Cash Payments and Readily Convertible Assets

If you offer non-cash payments to an employee that count as a readily convertible asset, you'll have to calculate and deduct PAYE tax and National Insurance contributions (NICs) on that payment. These assets could be stocks and shares, commodities like precious metals, financial instruments, or crypto assets.


Valuing a Readily Convertible Asset

A readily convertible asset is one that can be easily exchanged for cash. To work out the value of an asset, so that you can add to the employee’s pay for PAYE tax and NICs calculations, consider the cost of the asset to you, the value of the asset when you gave it to the employee, and if the employee has already sold the asset, how much they got for it. If the employee made a contribution towards the cost of the asset, deduct that amount from the estimated value.


Reporting and Paying

Once you've agreed on the value of the readily convertible asset, add the total value to your employee’s earnings, then deduct and pay Class 1 NICs and PAYE tax through your payroll. Record the figures for the ‘taxable pay for this period’ and the ‘pay subject to Class 1 NICs’ on the employee’s payroll record so that this is reported to HMRC in a Full Payment Submission (FPS).


Recovering PAYE Tax and NICs from the Employee

As you will not be able to make deductions directly from the non-cash payment itself, you must recover the PAYE tax and NICs due on it from any cash payments - like wages, salary, commission, and fees - that you make to the employee. Any PAYE which you do not recover from the employee must be made good by the employee within 90 days of the end of the tax year in which the non-cash payment was received.


Long Service Awards

If you give an award that’s a readily convertible asset and the recipient’s had at least 20 years of service and no previous award in the last 10 years, add any value above £50 per year of service to your employee’s earnings, then deduct and pay Class 1 NICs and PAYE tax through your payroll.


Payments in Kind That Can Be Cashed In

Payments you make to employees that can be converted into cash, like a cheque, Savings Certificate or Premium Bonds, count as earnings. You must add their value to your employee’s other earnings, then deduct and pay tax and Class 1 NICs through payroll.

In conclusion, paying employees in crypto assets or other non-cash assets requires careful consideration of tax and National Insurance contributions. It's always advisable to keep detailed records and consult with a tax professional if you're unsure about your obligations.


What Tax Form to Fill Out for Crypto in the UK?

As cryptocurrency continues to gain traction, it's crucial to understand the tax implications of trading and investing in these digital assets. In the UK, the HM Revenue and Customs (HMRC) requires crypto investors to report their gains and income. This article will guide you on the tax forms to fill out for crypto in the UK.


Self-Assessment Tax Return

In the UK, you need to report your crypto gains and income as part of your Self-Assessment Tax Return. This must be filed with HMRC by the 31st of January 2023. The forms to be used are SA108 and SA100. Failure to meet this deadline may result in penalties.


Reporting Crypto to HMRC

You report your crypto transactions as part of your Self-Assessment Tax Return. Income from crypto is reported in the Self-Assessment Tax Return (SA100), while capital gains or losses from crypto are reported in the Self-Assessment: Capital Gains Summary (SA108). The deadline for filing your Self-Assessment Tax Return online with HMRC is January 31st, 2023. However, if you are submitting a paper tax return, the deadline is October 31st, 2022.

Any crypto investor who made more than £1,000 in crypto income or more than £12,300 in crypto capital gains must submit a Self-Assessment Tax Return to HMRC.


Steps to Report Your Crypto Tax to HMRC

  1. Calculate Your Crypto Tax: You need to know your capital gains, losses, income, and expenses. Crypto tax software like Koinly can simplify this step.

  2. Register to File Taxes Online: If you're not already registered, do so with the Government Gateway service by October 5th, 2022.

  3. Fill Out the Self-Assessment Tax Return (SA100): Report any income from crypto in box 17. If you made crypto capital gains, check 'yes' on box 7.

  4. Fill Out the Supplementary Self-Assessment: Capital Gains Summary (SA108): This is where you report any capital gains or losses from crypto.

  5. Submit Your Self-Assessment Tax Return Online: Do this by midnight on January 31st, 2023.

Calculating Your Crypto Taxes

Before you can report your crypto tax to HMRC, you need to calculate your crypto totals for capital gains, capital losses, income, and any allowable expenses relating to your investments. Crypto tax software like Koinly can simplify this process. If you're not using Koinly, you'll need to do this step manually.


Registering to File Crypto Tax with HMRC Online

If you're submitting your Self-Assessment Tax Return by post, you can skip this step. However, if you're filing online, you need to register by October 5th, 2022. The steps are slightly different depending on whether you're self-employed or not.


Reporting Income in SA100

The Self-Assessment Tax Return (SA100) is where you'll report your crypto taxes. Report any crypto income in box 17 and any allowable expenses related to your crypto income in box 18. Give a description of the income in box 21.


HMRC Self-Assessment: Capital Gains Summary SA108 for Crypto Tax Reporting

The Self-Assessment Capital Gains Summary SA108 is where you'll report your crypto capital gains and losses. It is a supplement to the Self-Assessment Tax Return, so you'll submit both together.

In conclusion, reporting crypto taxes to HMRC involves calculating your gains, losses, and income, filling out the appropriate forms (SA100 and SA108), and submitting them by the deadline. It's always advisable to consult with a tax professional.


How a Personal Tax Accountant Can Assist with Crypto Tax


How a Personal Tax Accountant Can Assist with Crypto Tax in the UK

As the world of cryptocurrency continues to evolve, so does its tax implications. In the UK, the HM Revenue and Customs (HMRC) has clear guidelines on how crypto assets are taxed. However, the complexity of these guidelines can be overwhelming for many. This is where a personal tax accountant can step in to help. Here's how.


Understanding Crypto Tax Regulations

The first way a personal tax accountant can assist is by helping you understand the complex tax regulations surrounding cryptoassets. They can explain the HMRC's stance on cryptoassets, how they are classified, and what tax implications they carry. This includes understanding the difference between trading and investing in crypto, and how each is taxed differently.


Calculating Capital Gains and Losses

One of the main tax implications of dealing with crypto assets is capital gains tax. When you sell, trade, or dispose of your crypto assets, you may be liable for capital gains tax on any profits. A personal tax accountant can help you calculate these gains or losses accurately. They can guide you on how to track the cost basis of your crypto assets, calculate the gain or loss on each transaction, and aggregate these amounts for your tax return.


Filing Your Tax Return

Filing a tax return can be a daunting task, especially when it includes crypto transactions. A personal tax accountant can help you navigate this process. They can assist you in filling out the necessary forms, such as the Self-Assessment Tax Return (SA100) and the Capital Gains Summary (SA108). They can also ensure that you meet all deadlines to avoid penalties.


Minimizing Your Tax Liability

A personal tax accountant can provide advice on how to minimize your tax liability. This could involve strategies such as utilizing your tax-free allowance, offsetting losses against future gains, or structuring your transactions in a tax-efficient manner. However, it's important to note that tax evasion is illegal, and any strategies suggested by your accountant should be within the boundaries of the law.


Keeping Up-to-Date with Changes

Tax laws and regulations can change frequently, and staying up-to-date can be challenging. A personal tax accountant can help you stay informed about any changes to crypto tax laws and regulations. This ensures that you are always compliant with the latest rules and can make informed decisions about your crypto investments.


Record Keeping

Good record-keeping is essential for accurate tax reporting. A personal tax accountant can guide you on what records to keep, how to keep them, and for how long. This includes records of all your crypto transactions, the fair market value at the time of each transaction, fees incurred, and any other relevant information.


Peace of Mind

Perhaps the most significant benefit of hiring a personal tax accountant is the peace of mind it brings. Knowing that a professional is handling your taxes can alleviate stress and allow you to focus on your crypto investments.



In conclusion, a personal tax accountant can be a valuable ally in navigating the complex world of crypto tax. They can help you understand regulations, calculate gains and losses, file your tax return, minimize your tax liability, keep up-to-date with changes, maintain records, and ultimately, provide peace of mind.




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