In 2024, the tax department highlighted how to tax decentralized finance staking and lending. In the next section, we will look closer at what types of transactions are considered disposal and the difference between Capital Gains Tax and Income Tax. Our tax engine calculates your tax report on the basis of the UK tax framework.

Calculate Crypto Taxes Now!

It’s likely that other exchanges operating in the United Kingdom share customer information with tax authorities upon request. All the information contained within this guide is taken from the latest guidance from the HMRC and interviews with UK-based tax professionals. As per HMRC, the Cryptocurrencies (or Crypto Assets) are “capital assets”, which means Capital Gains Crypto Taxes in the United Kingdom Tax is applicable when you dispose of these assets. This is due to the decentralised nature of crypto, which provides anonymity, as well as the changing tax landscape and current lack of formalised international cooperation. Ambitious plans to protect consumers and grow the economy by robustly regulating cryptoasset activities have been announced by the government.

Reporting Cryptocurrencies on Tax Returns

According to the HMRC, staking rewards are taxable as miscellaneous income if you are earning interests as a hobby and trade income if you do it as a business. However, if you decide to sell the crypto on the 2nd of September 203, when the price of UNI was £3, the cost proceeds of the token becomes £600. As you’ll be making a profit of £200 (£600 – £400), you will have to pay CGT on this amount. However, suppose you receive an airdrop of tokens without giving anything in return (i.e., it’s a gift or promotional giveaway with no reciprocal action required). In that case, there is generally no immediate tax implication when receiving the tokens.

• Crypto Tax UK is not applicable for individuals when they buy crypto in The United Kingdom.
• Income tax ranges from 20% to 45% and applies to any Bitcoin received as payment or mining reward.
• It’s essential to understand that evading taxes is illegal and can lead to severe penalties.
• If you sell more crypto than you buy on a given day, you must follow the second rule.
• To better understand how airdrops are taxed, consider the 2021 $ENS airdrop.
• Trading one cryptocurrency for another is considered a taxable event.

How much tax do you pay on crypto in the UK?

You can do all of this online using the Government Gateway service, or you can file your self-assessment tax return by mail using paper forms. Please keep in mind that the deadline for postal Self-Assessment Tax Returns is October 31, 2021. DeFi is a relatively new concept that is constantly evolving in order to provide new investment opportunities for crypto investors. This means that HMRC has yet to issue clear guidance on DeFi tax in the UK. The FCA has prohibited the sale of crypto derivatives without written permission from the FCA. As a result, you should consult with a crypto tax advisor for more specific advice on these investments.

Guide to Crypto Taxes in the UK

Government activity

UK Income Tax on Crypto

• Capital gains tax ranges from 10% to 20% and applies whenever Bitcoin is disposed of in some way.
• Donating cryptocurrency to a charity is not a taxable event, i.e., you do not need to pay CGT when you donate cryptocurrency to a registered charity.
• This software streamlines the tracking and reporting of crypto transactions, ensuring compliance with tax regulations.
• Moreover, if you acquire cryptos through activities such as mining, salary paid in cryptos, or compensation for services, also known as crypto earnings are subjected to Income Tax in the UK.
• In the UK, they can be subject to either Capital Gains Tax (when you sell or dispose of crypto) or Income Tax (when you receive crypto as a form of payment, from mining, staking, or airdrops).
• Cryptotaxonline.co.uk provides expert knowledge without the high fees or jargon – as well as the UK crypto accountancy expertise you require.