Do you owe tax on cryptocurrency?

Do you owe tax on cryptocurrency in the UK?

By Published On: 7 December 2023Tags: ,

If you currently have cryptoassets, or you’ve dealt with cryptoassets in the past, there’s a good chance you owe tax on those assets. For some time, there was confusion about how crypto was taxed, but HMRC’s position is now much clearer. Let’s break down how crypto tax works and how we can help you stay compliant.

How has HMRC’s stance on crypto tax changed?

In 2014, HMRC likened cryptoassets to gambling, deeming them to be highly speculative transactions and therefore potentially not taxable. This sparked a belief that gains made from crypto trading weren’t taxed at all. However, as the popularity of cryptoassets increased, HMRC clarified their position stating that crypto trading was not comparable to gambling and would be subject to taxation, likely also including capital gains tax.

Do you need to pay taxes on crypto?

Yes. Even though cryptoassets are not considered to be money or currency by financial institutions, HMRC treats them similarly to shares, meaning that, depending on the type of transaction, they will be subject to Capital Gains Tax and/or Income Tax.

How much tax will you need to pay?

Most transactions will fall within capital gains tax. If your gains exceed the £6,000 tax-free limit, you’ll pay 10% or 20% tax depending on the level of your other income. It’s important to note that the tax-free allowance for capital gains is reducing to £3,000 for the 2024/25. You might also have some transactions which would be classed as income. Depending on your Income Tax band, additional income from crypto that exceeds the personal allowance will be taxed at 20% to 45%.

Also, make sure you always report your losses because these can be utilised against gains you make in the future.

Can HMRC track crypto?

Using information from exchanges like and through a data sharing program with UK exchanges, HMRC can effectively track crypto transactions. They have access to data dating back to 2014 as well as ‘Know Your Customer’ information provided during exchange or wallet sign-ups. This information is being used by the tax authority to monitor crypto activities and target those that are not fulfilling their tax obligations. HMRC are now also sending out ‘nudge’ letters to individual investors and businesses to request that they report their crypto activity.

How can Aardvark Accounting assist?

If you currently hold crypto investments or have done so in the past, you will need to complete a tax return and declare those assets. At Aardvark Accounting, our specialist tax team can guide you through this process and offer expert advice. Simply get in touch with your client director to see how we can help you. Not yet an Aardvark client? Contact us today to find out more about our services.

Note: All the information and advice in this blog post was correct at the time of writing.

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