Crypto tax
Take help from knowledgeable and reliable UK accountants for crypto-traders
Making cryptocurrency trading gains but unsure of the tax obligations on your profits?
We provide robust cryptocurrency tax advice and structure your affairs to be as tax efficient as possible.
Make sure the correct amount of tax is paid with 3E’S.
Investing in crypto currency has become increasingly popular in the past few years, with many people expecting to make a quick fortune and a tax-free return. However, such is not the case.
Crypto trading isn’t tax-exempt and has caught the eye of HMRC, who wants to ensure all businesses, traders, and investors pay the correct amount of tax on their crypto assets.
How is crypto taxed, you ask?
In the majority of circumstances, crypto is held personally. Any gains made will be typically subject to Capital Gains Tax. However, crypto trading is more than simply buying and selling.
Sure, crypto can be purchased, but it can also be acquired through other means, such as staking and mining. The tax treatment is dictated by how crypto is acquired, and even if it has been mined and not yet disposed of, crypto may still be subject to UK tax.
In rare instances such as mining, airdrops and yield farming, an individual may be required to pay Income Tax and National Insurance on crypto assets.
Whatever the situation, you must be aware of your tax obligations for your crypto activities and you should seek professional advice from a specialist cryptocurrency accountant.
What you get with 3E’S crypto tax support services
- Calculation of taxable gains and losses on your crypto assets
- Robust tax planning to ensure that your crypto assets are properly structured
- Correspondence with HMRC on your behalf, including tax disputes and investigations
- Management of your annual HMRC filing obligations
- Ensuring correct valuations are used for your crypto asset disposals
- A dedicated tax advisor to help you with undeclared crypto gains and disclosures
- Creation of tax-efficient structures for non-UK domiciled individuals
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Is 3E'S the right choice
for your business?
We could throw a long list of reasons at you for working with us. But we’ll stick with a few:
Our knowledge of crypto regulations speeds up your tax planning and filing.
Stay ahead in the rapidly evolving cryptocurrency tax landscape with our expert advice.
Our specialists provide insights tailored to the unique challenges of crypto taxation.
Get the best crypto tax guidance without overextending your budget.
Focus on your crypto investments while we manage the tax implications.
Frequently asked questions
Yes, depending on your activities and the tax laws in your jurisdiction, you may need to pay taxes on your cryptocurrency holdings. In the UK, HMRC treats cryptocurrency as property rather than currency. Key taxable events include:
- Selling cryptocurrency: If you sell cryptocurrency for a profit, you may be liable for Capital Gains Tax (CGT) on the gains.
- Trading cryptocurrency: Frequent trading may be considered a business activity, and profits could be subject to Income Tax rather than CGT.
- Mining and staking rewards: Income from mining or staking cryptocurrency is subject to Income Tax.
- Receiving cryptocurrency as payment: Receiving cryptocurrency for goods or services is considered income and subject to Income Tax.
To ensure compliance with tax obligations, it’sIt’s essential to keep detailed records of all transactions and consult with our tax professional.
If you haven’t reported your cryptocurrency transactions to HMRC, taking action as soon as possible is important to rectify the situation.
Failing to report cryptocurrency transactions can lead to penalties, interest on unpaid taxes, and potentially more severe consequences. Here are the steps you should take:
- Collect all records of your cryptocurrency transactions, including purchases, sales, trades, and income received.
- Determine the gains or income from your cryptocurrency activities and calculate the tax owed.
- You can file amended returns to include your cryptocurrency transactions if you need to correct previous tax returns.
- Consider making a voluntary disclosure to HMRC to report previously unreported transactions. This can help reduce penalties and show your willingness to comply.
In the UK, receiving cryptocurrency as a gift is generally not taxable for the recipient at the time of receipt. However, there are important considerations:
- If you later sell or dispose of the gifted cryptocurrency, you may be liable for CGT on any gains made since you received the gift.
- While there’s no gift tax in the UK, a donor who gifts a significant amount and passes away within seven years of making the gift may be subject to inheritance tax (IHT) considerations.
- It’s crucial to keep records of the date you received the gift, the value of the cryptocurrency at that time, and any subsequent transactions.
Consult with our tax professionals to understand the full implications and ensure compliance with tax regulations.
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