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What tax do I pay on Bitcoin and crypto?

We've updated this guide on 12th February 2021

Key points about crypto taxes:

  • Cryptocurrencies are legal in the UK
  • You must keep records of your crypto transactions
  • HMRC treats profits occurring when exchanging crypto to GBP as subject to capital gains tax by default
  • If you’re accepting crypto for your sole trader services, treat them as payments in a foreign currency.

Do I pay taxes on mining crypto?

Yes, if the value of the coins you got from mining is over £1,000 in GBP equivalent.

Basically, HMRC treats cryptocurrency miners as traders, so you need to pay:

  • income tax
  • national insurance.

The good news: you can also claim expenses like electricity and mining rigs.

What if I trade often?

In theory, you should declare yourself a trader to HMRC and pay income tax and National Insurance.

Otherwise, you will be considered an investor by default and pay CGT.

Can I get relief on my crypto losses?

Yes, but only for the same kind of income (investments or trading income, depending if you registered as a trader or not).

Do I need to worry about VAT for crypto transactions?

According to HMRC:

  • no VAT on mining;
  • no VAT for crypto-to-sterling or sterling-to-crypto exchanges;
  • if you charge cryptocurrencies for selling goods or services, then you need to calculate and pay VAT – in GBP.

Invest wisely.

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