Crypto Tax UK: Your 2024 Guide

Crypto tax regulations are evolving constantly. You need to always keep an eye on it to know what is exactly going on. There can be changes in the regulations, the whole regulation can get replaced by another and multiple related shifts can take place.

It is 2024 there have been some recent changes in crypto tax regulations. Here we help you to understand the specifics of how to declare cryptocurrency, how are cryptocurrencies taxed in the UK, and details related to more.

Understanding Crypto Taxes in the UK: 2024 Update

Crypto tax UK

What is the crypto tax year duration in the UK?

The tax year duration is between April 6, 2022, and April 5, 2023. You need to declare all cryptocurrencies within this duration. The paper tax return ends on October 31 at midnight 2023. If you are filing for the tax return online, the deadline is Jan 31, 2024. The tax payment deadline is on Jan 31, 2024. This is according to the Self-Assessment Tax Returns Deadlines of the Government of the UK.

Are cryptocurrencies taxed?

Yes, cryptos are taxed in the UK. Crypto taxation takes place under two major categories Income Tax and Capital Gains Tax.

Crypto is taxed as Income Tax when you receive or earn crypto as part of your employment compensation, staking, mining, and airdrops. Crypto is taxed as Capital Gains Tax when you sell, exchange, use, or transfer crypto assets. However, it is not taxable when you transfer crypto to your civil partner or legal spouse. 

Cryptocurrencies are broadly classified into 4 categories for tax purposes. They are:

  1. Utility Tokens
  2. Exchange Tokens
  3. Security Tokens
  4. Stablecoins

Are all crypto payments taxed?

No, not all crypto payments are taxed. Some crypto transactions are untaxed. You do not have to crypto tax when you only hold to crypto, buy crypto using Fiat currency, transfer crypto to your legal spouse, when you transfer crypto from one of your wallets to another, and also when you donate crypto to charity.

Inheritance tax and Value Added Tax for crypto in the UK

As crypto is considered as a digital ‘asset’ they are subjected to inheritance tax. You will have to pay an inheritance tax for crypto-only if the total value of the holdings exceeds £325,000.

All the cryptocurrency exchanges for a traditional currency are not subject to Value Added Tax (VAT) in the UK.

Crypto Tax Rates in the UK

The crypto tax rates in the UK are as follows:

  • The crypto tax rate under Income Tax is 20% to 45%
  • The crypto tax rate under Capital Gains Tax is 10% to 20%

Capital Gains Tax-Free Allowance

Tax Year 2022 – 2023 — £12,300

Tax Year 2023 – 2024 — £6,000

Tax Year 2024 – 2025 — £3,000

Income Tax Rates

Basic rate can be up to £37,700 making up 20%

Higher rate can  be up to £125,140 making up 40%

Additional rates can be up to £125,140 making up 45%

Crypto Transactions: Gain or Loss

You need to know whether you have had a gain or loss on your crypto transactions when you pay the tax and when you file for tax returns. Calculating the crypto gain or loss can be done in 3 key parts. They are as follows:

1. Cost Basis

The cost basis is based on the rate at which you purchased the crypto. You can find the cost basis by combining the cost basis of purchased crypto plus related fees if there were any. If you had received crypto through processes such as crypto staking or crypto mining and if you had paid income tax on it, then the cost basis becomes the value of the crypto at the time of your receiving it. Subtract this total amount from your sale price to find whether you have had a loss or a gain.

2. Price of Sale

The sale price is the amount at which you are selling your cryptocurrency or the value the crypto has when it was disposed of.

3. Fees

You can find the fees by deducting them from the sales transactions. And it can be added to the purchased crypto’s cost basis

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