What tax do I pay on Bitcoin and crypto?
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.