HMRC and your Cryptoasset capital gains tax position
HMRC has written to UK holders of cryptoassets which is being seen as a clear reminder for holders to ensure they are aware of their tax obligations and are disclosing necessary information to HMRC.
The letter states that disposals of cryptoassets include:
- Selling them for sterling or other ‘fiat’ currencies;
- Using them to purchase goods and services;
- Gifting them;
- Exchanging them for other cryptoassets.
There is no specific Bitcoin tax or cryptocurrency tax in the UK. Instead, your cryptoassets will either be subject to capital gains tax or income tax. If you have engaged in any of the activities above you may be liable for capital gains tax. If you are earning cryptoassets through activities such as mining you may be liable to declare this as income tax.
A key point to remember is that record keeping is essential. Cryptoasset exchanges may only keep records of transactions for a short period, or the exchange may no longer be in existence when an individual completes a tax return.
The onus is therefore on the individual to keep their own records for each cryptoasset transaction.
Records of cryptoassets can be:
- paper (cold) wallets containing the individual’s public and private keys
- electronic (hot) wallets on devices
- other records of their transactions and balances such as downloads of their wallet activity from a cryptoassets exchange
- hardware (cold) wallets looking like a USB, containing the individual’s public and private keys.
Cryptoassets are digital assets and as such all records in a wallet should show balances and transactions, either in full or via reference to a public blockchain. The individual’s access to fiat currency could come from:
- the point of deposits into a bank account; and
- use of a cryptoasset Automated Teller Machine (ATM)
These are records which should also be kept and produced for an enquiry. They form part of the audit trail from acquisition to disposal and therefore evidence of any gains made.
Cryptoassets and inheritance tax
Cryptoassets form part of the holder’s estate for inheritance tax purposes and therefore if their value, and the value of other assets, exceed the nil rate band, they will be liable to inheritance tax on the holder’s death.
Cryptoasset tax legislation is in constant flux, for up to date information on how HMRC are treating crypto asset please see the cryptoasset manual link
Have you received a letter and have questions about your position? Do get in touch with your Swindells’ partner who will be able to advise you further.
Swindells’ client Sammons Recruitment Group, acquire Brightred & On Track
Swindells are proud to announce that clients Sammons have acquired Brightred and On Track as part of their major growth strategy. Swindells provided accounting and tax support throughout the process culminating in a positive result for our client. Below is the Sammons press release: Sammons Recruitment Group has acquired IT recruitment experts Brightred Resourcing and […]
Make use of our factsheets, tax calendars and more resources for FREE!
A wealth of information just a few clicks away
As part of our online website offering, we have a plethora of helpful fact sheets, online calculators, tax calendars and downloadable forms all for free. Have a browse and see what is relevant to you or your business.
New customs IT platform – get ready for the change
The UK customs declaration service CDS is replacing the CHIEF system. Get ready for the deadlines in September 2022 and March 2023.
The UK customs authority HMRC is closing the Customs Handling of Import and Export Freight (CHIEF) system on 31 March 2023. It is being replaced with the Customs Declaration Service (CDS) as the new UK’s single customs platform. All businesses managing UK customs declarations will need to declare goods using the Customs Declaration Service.
Sign up to receive our private content
straight to your inbox