Is there a crypto tax? (UK)

So, is there a crypto tax in the UK? 

Whilst cryptocurrency is a relatively new asset, the regulations surrounding it are still being formed. HMRC doesn’t consider cryptoassets to be a form of money, whether exchange tokens, utility tokens or security tokens. However, when it comes to taxing them, it depends on how the tokens are used. 

Bitcoin is an exchange token and, like many other exchange tokens, is used as a method of payment. So if you hold cryptoassets like Bitcoin as a personal investment, you will still be liable to pay Capital Gains Tax on any profit you make from them. 

Why is there a crypto tax (UK)?

At different points in the ten year history of cryptocurrency, Bitcoin has fluctuated significantly in value. Those who bought Bitcoin back in 2008 when it was worth fractions of a dollar could potentially have made hundreds of millions of dollars in profit in 2017 when its value peaked at almost $20,000, or in 2021 when it peaked at $67,000 🤯 

In the UK, you have to pay tax on profits over £3,000 (2024/25). And so irrespective of your view on the validity of cryptocurrency, you will always be liable to pay tax on your investment profits from them.

Do I have to be a crypto trader to be taxed?

There are various methods of acquiring cryptocurrency that might make you liable to be taxed:

• Given to you by your employer as a form of non-cash payment
• You’re a crypto miner 
• Your business is back by cryptocurrency (i.e. you trade with crypto instead of fiat)
  • In this case, you’ll also be liable to pay Income Tax and National Insurance
• You trade crypto
  • If you trade volumes that amount to what HMRC considers as financial trade, you’ll also be liable to pay Income Tax, although these cases are few and far between

When you trade crypto, unlike some forms of forex trading, HMRC does not class it as gambling. As a result, you’re always liable to pay tax on your profits. 

What is the crypto tax (UK)?

If your crypto profits exceed the Capital Gains Tax allowance, you’ll have to pay crypto tax at the following rates:

Be aware that these crypto tax rates are subject to change each year. Make sure that you stay abreast of any changes to CGT rates when you put money aside to do your tax return.

How do I pay crypto tax on my profits?

As with all tax you pay on profits, you’ll have to do a Self Assessment tax return to declare your income to HMRC and pay the correct amount of crypto tax.

If you’ve never done one before, don’t worry. The process isn’t too complicated if you know what you’re doing. Follow the below steps and you’ll be on the right path!

1. Make sure you register for Self Assessment tax return by 5th October 
2. Keep a good record of your crypto transactions, trading profits and expenses through the tax year
3. Pay the tax you owe by 31st January
4. Calculate the tax you owe as soon as you can to prepare for the bill

To help you along the way, take a look at our Capital Gains Tax calculator here.

What do I need to send my crypto accountant (UK)?

At TaxScouts, our accredited accountants require a couple of things to get started on your Self Assessment tax return. A quick heads up – it’s not possible for our accountants to use a transaction summary to calculate the CGT you owe. This is because transaction summaries contain hundreds – sometimes thousands – of individual transactions!  Our accountants do need to see the proof of transactions to compare them with your totals, but they can’t take this alone. To make the whole tax return process quick and smooth, please send them:

1. Your proof of transactions
2. A CGT report from your broker or online trading platform in the form of a PDF or CSV file

So, yes, they need both. And if you’re curious or confused as to what a CGT report is, it’s simply a compressed version of your transaction history. We have a bunch of partners who are able to help you with this, and if you take a look at this guide, you’ll be able to read more about filing a crypto-specific tax return.