If you’re one of the over 3.3 million people in the UK who hold cryptoassets like cryptocurrency or bitcoin, then you’ll need the support and guidance of an experienced tax advisor to ensure you’re compliant with the government’s crypto tax rules.
What are cryptocurrencies?
Cryptocurrencies are digital currencies, or digital money. They’re not physical or tangible, like cash or cards, rather they’re completely virtual. Bitcoin is by far the most well-known, but there are over a thousand in existence, such as Dogecoin, Ethereum, Ripple and Litecoin.
Cryptoassets are increasingly popular with investors, as their value has risen enormously, on average, over the last decade. In 2009, investors could get their hands on a Bitcoin for $1, whereas in January 2022 one Bitcoin cost $47,000. But cryptocurrency is a high-risk, volatile market, so investors must be willing to risk losing their money if they want to start investing in cryptoassets.
What tax is owed on cryptocurrencies?
HMRC has recently published new guidance on the tax treatment of cryptoassets, with a manual available to download that includes advice for both individuals and businesses. The guidance covers what tax you may need to pay, what records you need to keep, and advice for businesses on the tax treatment of crypto transactions and paying employees in cryptocurrencies.
Individuals can also use the government’s tools to check if you need to pay tax when you:
For more information on the tax treatment of cryptoassets, download our factsheet Cryptoassets: How Are They Taxed?
There is growing interest in holding and transacting with cryptocurrency, with increased awareness and possession among Britons, according to research. Over 5% of the UK population now own cryptoassets of some form, with 42% using them to pay for purchases, and the remaining 58% keeping them solely for investment purposes.
If you’re interested in purchasing cryptocurrency and would like to understand the tax implications, our team of expert tax advisors are perfectly positioned to help. Get in touch to discuss your existing portfolio or to find out how you can get started using cryptocurrency to grow your wealth.