In the UK, gains or losses from the sale or disposal of cryptocurrency are subject to capital gains tax. This means that if you sell or dispose of your cryptocurrency at a profit, you may be required to pay capital gains tax on the profit.
If you hold cryptocurrency as an investment, any profit you make on the sale or disposal of the cryptocurrency is considered a capital gain. If you hold cryptocurrency as part of a business, any profit you make on the sale or disposal of the cryptocurrency is considered business income.
You are required to pay capital gains tax on your cryptocurrency profits if the total value of your taxable capital gains for the tax year exceeds the capital gains tax allowance, which is currently £12,300 per year (2021/2022) for individuals and personal representatives, and £6,150 for most trusts.
To calculate your capital gains tax liability, you will need to determine the cost of acquiring the cryptocurrency, including any fees or commissions paid. You will then need to subtract this amount from the sale price to determine your capital gain or loss. You can then use this information to calculate your capital gains tax liability using the appropriate tax rates.
It’s important to note that you may be able to offset some or all of your capital gains tax liability by claiming capital losses or by using any available allowances or reliefs. You should consult with a tax professional or refer to the guidance provided by HM Revenue and Customs (HMRC) for more information on how to calculate your capital gains tax liability and claim any available reliefs or allowances.
