Cryptocurrency and HMRC taxes - Kuits Solicitors Manchester
  • Insights
  • Cryptocurrency and HMRC: what taxes can you expect to pay on your crypto assets?

Cryptocurrency and HMRC: what taxes can you expect to pay on your crypto assets?

Cryptocurrency and HMRC: what taxes can you expect to pay on your crypto assets?

17th February 2021 - Published by Kuits Tax team

Bitcoin is once again in the news, this time following Tesla’s $1.5 billion investment in the cryptocurrency and announcement that they will start accepting payment for their vehicles in Bitcoin, which some commentators have taken as a sign that it is on its way to becoming a mainstream financial asset. Bitcoin is probably the best known cryptocurrency, although there are others such as Litecoin or Ethereum.

Many people think that because cryptocurrency doesn’t have a physical form that trading it or accepting it as payment for work done has no tax consequences. However, this is not the case and HMRC will prosecute individuals who do not declare their income/gains from cryptocurrency.

Cryptocurrency and Capital Gains Tax

It is common knowledge that the value of crypocurrency has increased dramatically over the past few years, but what is less well known is that the increase in value is subject to Capital Gains Tax in the UK. HMRC have made it clear that moving from one cryptocurrency to another gives rise to a potentially taxable event. Many investors will trade between currencies many times a week and are completely unaware that each time there is a potential liability to Capital Gains Tax – or possibly income tax if HMRC view the regularity as trading.

HMRC have also given guidance on the situs of crypto assets for Inheritance Tax purposes that is particularly disadvantageous to those not domiciled but living in the UK.

What HMRC have not however is provided any guidance on the taxation of bonuses/rewards/interest earned from lending cryptocurrency, although it is highly likely that these will be taxable. Neither have they consider the status of wrapped coins. 

How can I mitigate my tax?

Kuits’ Tax Investigations team specialise in demystifying the taxation of cryptocurrencies, helping regularise undeclared cryptocurrency earnings, gains and income with HMRC and also in strategic planning to mitigate the taxes in the first place, with a particular expertise in advising individuals moving to the UK on planning steps to be taken with their cryptocurrency before they become UK resident.

Get in touch with Cryptocurrency experts in Manchester

If you would like advice on any of the taxation matters regarding Cryptocurrency, please get in touch with Elaine Roche on 0161 838 8123 or at elaineroche@kuits.com; or Paul Bricknell on 0161 838 7860 or at paulbricknell@kuits.com.

Subscribe to our mailing list