Crypto Tax UK – Complete Guide For Tax For Cryptocurrency

Complete Guide for Tax for Cryptocurrency in the UK

Cryptocurrency has been one of the more interesting currency developments of the last few years. It’s been a controversial currency and one that has been the center of a lot of attention from those looking to make a profit from it.

With more and more people getting into cryptocurrencies, because of this, there has been a lot of discussion about the tax treatment of income derived from trading and holding cryptocurrency. You can learn about mining at and easily start trading

What Kind Of Currencies Are Taxable?

What Kind of Currencies are TaxableAny digital currency that any organization converts into British pounds at any exchange rate is taxable as per HMRC standards. So, normally HMRC will tax any new cryptocurrency that is a part of a trade exchange. The corporation tax rules of cryptocurrencies are changing at a fast pace, so it is important to get up-to-date information on the new rules for each country. Whichever country you belong to, if you have been trading in cryptos from a UK address, then your earnings will be liable to tax today.

What Tax Laws Apply To Cryptocurrency?

What Tax Laws apply to cryptocurrencyAs cryptocurrencies are virtual currencies and do not meet the definition of “currency” in the Value Added Tax (VAT) Act 1994, they cannot be subject to VAT. HMRC has recently given guidance that income from cryptocurrencies should go as a part of the general income under personal taxation. HMRC’s guidance is that any individual participating in cryptocurrency trading should include their profits or losses of each transaction made during the tax year when calculating taxable income.

For instance, if an individual bought one bitcoin at £634 and sold it two months later at £6,340, then the £6,308 they made in profit would be taxable and they should include this in their annual tax return. When you make a profit from cryptocurrency, the government body will tax you as a standard income. If you trade with cryptocurrency, you will need to pay capital gains tax and income tax on any turnover or profits.

Who Needs To Pay The Tax?

The HMRC standards compel anyone who has been trading bitcoin as a source of their income in the UK to pay tax. Even if you have earned no money or received any income, then there is still a chance that HMRC may tax you. If you are a resident of the UK, then it is possible that they could tax you depending on your business or personal affairs. They will consider owners of cryptocurrency addresses associated with your name as the owner person in the UK, and therefore you will be liable to pay taxes.

What Are The New Tax For Cryptocurrency In The UK?

What are the new tax for cryptocurrency in the ukThe new tax rates for cryptocurrencies in the UK are that they will charge a 20% VAT on the profit made from buying cryptocurrency. They will not charge VAT if you make a profit from mining cryptocurrency. It is now available to buy bitcoin, litecoin, and ethereum using the UK’s Faster Payments Service (FPS). The FPS will make a transaction a lot faster means you can buy cryptocurrency without having to wait several hours.

The £250 limit for paying for crypto with FPS means that if you make a few purchases every month, it will be possible to pay your bills by choosing FPS. Many exchanges offer higher limits of payments which the crypto community has embraced since it costs less to transfer larger amounts of money from one country to another. Sometimes, the transfer fees are as low as 0.2%.

Capital Gain Tax On Cryptocurrency

They levy Capital Gains Tax in the UK on certain income generated from investments in securities, property, cryptocurrency, and other assets. Capital gains tax applies when you sell an asset that has risen in value since you gained it.

To calculate your capital gains tax liability in the UK, you need to know the following information:

  • The number of capital gains
  • The cost of acquiring the asset
  • The date you gained the asset
  • Your holding period for the asset (the number of days)
  • The amount of income generated from the asset, and
  • Any allowances you may claim.

The income generated from a crypto-currency can be significantly higher than a normal investment. This is because the price of a crypto-currency can increase over time by over 100%. Therefore, if you hold on to coins for several years and then sell them when they have appreciated in value, you could face very high capital gains tax charges if they did not hold the coins in an ISA or something similar. They can know the taxes you are liable for by totaling the income generated from the acquisition of the assets. Then you take your total revenue tax liability and apply an appropriate rate.

There are two main rates of Capital Gains Tax that you could be liable for:

  • The basic rate is 20% or 20% plus £10,600. They could include this as a charge with gains appearing in any tax year and applies to all normal trading profits generated by crypto-currencies.

At this stage, there will be no special rules for crypto-currencies, so investors will pay the full 20% on any profits they make from their investments or savings accounts.

  • A higher rate of 40% is to be charged on gains appearing in the tax year. They charge a higher rate to those with significant holdings, especially where there was profit from crypto-currencies.

These tax rules are complex and it is very unlikely that all investors will pay 40% except those who have not yet completed their tax returns. As with most parts of the UK taxation system, Capital Gains Tax is progressive and they charge it at higher rates and on higher profits.


The cryptocurrency market has grown exponentially in the past 10 years, and with it has come increased legislation. While we perceive cryptocurrencies as anonymous, they are not always tax-free. It may be a very complex and confusing process to be a part of tax filings for cryptocurrency in the UK, but it is very much necessary to be a tax-compliant citizen.


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