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How to do a CGT tax return for crypto & shares

  • 3 min read
  • Last updated 17 May 2022

Do you invest in shares, FX or crypto? Then we can help. Of all the personal tax returns, this can be the most complicated to sort yourself. There’s not only the volume of transactions to consider but the 30 day rule, best practice bookkeeping, the added complications of being tax efficient etc. And it can be a headache for accountants too!

In this blog, we’ll go over how to use the TaxScouts service for your CGT tax return, what documents you’ll need, and how our partners can support you.

The trouble with CGT tax returns

Unless you made profit from selling property, CGT tax returns can be fiddly. When it comes to crypto and shares especially, you can end the tax year with thousands of tiny transactions to sift through. If you’ve traded multiple types of asset, it’s complicated further still. And that’s not even mentioning share matching…

The Bed and Breakfast rule

Each tax year, you have a £12,300 tax-free allowance when it comes to investment profits. Anything you earn in excess of this is taxed at the up-to-date Capital Gains Tax rates. Your tax-free allowance can’t be carried over into the next year if you don’t use it, so many investors will sell their assets just before the end of the tax year to benefit from the allowance, then rebuy them immediately to reset the base value of their assets. This is known as bed and breakfasting.

Section 104 holding

Hold onto your hat. This can be confusing. A Section 104 holding is a method of pooling your investments of the same class into one asset. Confused? Here’s a cake analogy to help explain. Imagine you buy shares in Amazon, Apple, Microsoft, Meta and Twitter, all at different times and prices. Each of these companies represent different layers of a single (but decadent) cake. The cake as a whole is your Section 104 holding. When you cut a slice of the cake, its value is based on the average cost of the whole, rather than the individual layers.

CGT 30 day rule

Since 1998, any shares sold and re-bought within 30 days no longer count as a disposal for the purpose of CGT. The 30 day rule prevents investors from bed and breakfasting for favourable CGT purposes. If the same individual assets are bought within 30 days of being sold, they are matched with assets in this order:

  1. Assets bought on same day as a disposal (a.k.a the same day rule)
  2. Any assets bought within 30 days of a disposal
  3. Assets comprised in a Section 104 holding

What should I send to my TaxScouts accountant?

With the TaxScouts tax return service, you get an accredited accountant to file your tax return for you. They can help you with anything you’re confused about, and everything is submitted for you online for a low, flat fee. 

When it comes to CGT tax returns, our accountants work fastest with a consolidated CGT report. Love is a strong word… but they love them. 

This is because we’re not a bookkeeping service so if you only give us a transaction summary with thousands of individual transactions – especially if you trade crypto – it’s often not possible for us to help. Here’s the information that we need:

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

So what’s the difference between a transaction summary and CGT report?

It’s pretty simple, but easy to mix up. 

A transaction summary is basically every individual transaction you’ve ever made via your trading platform. To calculate your profits and losses, this is a manual task and almost impossible to do accurately with certain assets (e.g. crypto). 

In comparison, a CGT report is a compressed version of your transaction history that has the HMRC matching and pooling rules (mentioned above) applied to each of your transactions. You can usually download this directly from your trading platform. Generally, you should send both documents to our accountants so that they can see the proof to back up your totals. 

Take a look at our CGT calculator to work out how much you might owe based on your total profits.

Your situation

Outlined number oneOutlined number one
How did you make money?
Profit from capital gains
Annual salary
?
Other income
?

Tax and profit

Outlined number two
  • Your profit from
    shares
    £20,000
    Incl. £12,300 tax-free CGT allowance
    ?
  • Capital Gains Tax to pay
    £1,413
  • Profit after tax
    £18,587

How your capital gains tax is calculated

Your total capital gains tax (CGT) owed depends on two main components:

  1. How much you earn in total
  2. What type of assets you sell

Your overall earnings determine how much of your capital gains are taxed at 10% or 20%.
Our capital gains tax rates guide explains this in more detail.

In your case where capital gains from shares were £20,000 and your total annual earnings were £69,000:

Capital gains tax (CGT) breakdown

You pay no CGT on the first £12,300 that you make

You pay £127 at 10% tax rate for the next £1,270 of your capital gains

You pay £1,286 at 20% tax rate on the remaining £6,430 of your capital gains

All I have is a transaction summary!

🚨 SEND HELP 🚨

We’re joking. We can still absolutely help you. TaxScouts is partnered with lots of businesses who can support you with this very issue. You can download a CGT report in a couple of clicks and send it straight over to your accountant. Here are our partners who can help and where you go to pull a report.

If you’re trading on multiple platforms, we’d recommend using one of the below to download to compress your profits and losses into a single document.

eToro

  • Login, go to Settings and scroll to the ‘Account’ tab
  • Scroll down to Documents and click to to view your reports
  • Check out eToro’s tax report FAQs for more info

Crypto Tax Calculator

Accointing

Nutmeg

  • If you have a GIA account, Nutmeg will send you a tax pack, post tax year end
  • HINT: any time after 6th April!
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