How are cryptoassets taxed in the UK?

To begin with, tax is payable on any profit received from the disposal of cryptocurrencies. This includes when they are:

• Sold;
• Exchanged for another cryptoasset; or 
• Used to buy goods or services.

Cryptoassets are taxed according to their nature and how they are used, rather than the definition of the asset. 

The vast majority of cryptoasset investors who live in the UK are potentially liable to CGT on any profits or gains from any disposals that they may have made. CGT is only payable if total gains from all relevant assets are above the annual exempt amount (tax-free allowance), which is £12,300 in 2021-22.      

In rare circumstances, revenue from cryptoassets may fall under income tax rules, for example if the investor is:

• Actively ‘mining’ or ‘staking’;
• ‘Trading’, where HMRC deem it to be a job or profession; or 
• Getting paid for a job or service in cryptoassets or cryptocurrency.               

HMRC may view all of these activities as forms of generating income, which makes them subject to income tax (up to 45 per cent depending on your income), not CGT. 

Learn more here: https://www.ftadviser.com/investments/2022/01/17/what-you-need-to-know-about-tax-and-cryptoassets/

TAX ADVICE IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.