How is cryptocurrency taxed in the UK?
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How is cryptocurrency taxed in the UK?
March 15, 2022
There is no specific cryptocurrency tax in the UK. Instead, your crypto will either be subject to Capital Gains Tax or Income Tax.
The crypto tax you’ll pay depends on the specific transactions you’re making with your crypto. If you’re seen to be making an income, you’ll pay Income Tax. If you’re seen to be making a capital gain, you’ll pay Capital Gains Tax.
If you trade cryptocurrencies for your business in the UK, then any profits are subject to income tax at normal rates. This includes mining for cryptocurrencies.
If you don’t trade for business, the crypto-assets are typically treated in the same way as stocks and shares, and so any gain made is taxable under capital gains tax (CGT).
Disposal of cryptocurrencies includes cashing in the crypto for fiat (ordinary) currency, e.g. dollars or sterling, and the transfer of cryptocurrency from one person to another.
Under CGT you have the option to cash in or give away up to £12,300 tax-free every tax year. Any extra amount cashed in or given away will be taxed. If you are a standard rate taxpayer this will be at 10%, and if you’re a higher rate payer this will be at 20%.
Limited companies will pay corporation tax on gains at the usual rate, which is currently 19%, although corporation tax is changing with a higher rate of 25%.
The point at which you will potentially become liable to CGT doesn’t just include converting into fiat currency and transferring to another person, but also includes converting it into another type of cryptocurrency, for example Dogecoin into Ripple, and exchanging the cryptocurrency for goods or services.
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