Specialist Support for Complex Crypto Accounting UK Transactions and Tax Returns
Our dedicated cryptocurrency tax accountants and advisers help individuals and businesses navigate the often-complex UK tax treatment of cryptoassets.
Whether you’re a high-volume trader, a casual investor, or receive crypto through mining, staking, or employment, we provide practical support to ensure you’re fully compliant with HMRC cryptocurrency tax rules.
We can also assist with completing your Self-Assessment Tax Return and any Capital Gains Tax or miscellaneous income returns related to crypto transactions.
Why Crypto Accountants and Tax Matters
With HMRC ramping up its scrutiny of undeclared crypto gains and income, it’s vital to understand your obligations. Since 2017, HMRC has issued clear guidance and continues to access user data from crypto exchanges, issuing “nudge letters” to prompt disclosures.
Whether you’re voluntarily disclosing unreported income or want to avoid future penalties, our team provides tailored advice on compliance and disclosure.
When Is Cryptocurrency Taxable in the UK?
Crypto assets are not subject to a specific “cryptocurrency tax,” but they are taxed under existing rules for:
Income Tax and Cryptocurrency
Individuals who operate as self-employed and have crypto income exceeding the annual trading allowance of £1,000 are required to declare this through a Self-Assessment Tax Return by 31st January each year. Income Tax and National Insurance is payable where income exceeds £12,570 per year. Therefore, if you are trading in crypto and you are not reporting such income then you will need to include it in your Tax Return.
You may be liable for Income Tax if you are:
- Getting paid by your employer in crypto
- Mining crypto
- Staking crypto
- Receiving airdrops
Crypto Accounting UK, Capital Gains Tax, and Cryptocurrency
If you have made more than £3,000 in profit from selling, swapping, gifting to another person other than your spouse or civil partner, or spending (using it to buy goods and services) crypto, then such a gain will be subject to Capital Gains Tax.
Cryptocurrency and Businesses
Businesses involved in cryptocurrency trading or mining may be subject to corporation tax on their profits.
The supply of cryptocurrency is generally exempt from VAT in the UK. However, some activities related to cryptocurrencies, for example NFTs, may by subject to VAT.
In some exceptional cases it might be that individuals are considered to be financially trading in cryptoassets. Typically, this may occur in the following circumstances:
- Mining activities
- Airdrops
- Yield Farming
Need to Disclose Crypto Tax Liabilities?
If you haven’t reported crypto income or gains from previous tax years, we can:
- Help assess your exposure
- Support voluntary disclosures to HMRC
- Advise on possible penalties and mitigation
- Complete backdated tax returns as required
Are There Any Crypto Tax Calculators?
Whilst some individuals with more simple transaction histories may be able to keep details of their crypto trading and transactions details on spreadsheets or other forms, it is easier and provides more assurance and validity if a suitable crypto tax calculator or crypto tax software programme is used. Examples include Recap, Koinly, TokenTax, and CoinTracker.
Specialist crypto software can scrape data from exchanges and wallets to help work out your tax liability. Some tools also include a free crypto tax calculator for the UK to help you work out your profits and liabilities.
For those that make significant numbers of crypto transactions, calculating the gains and losses made along with the income received can be a real challenge. When it comes to completing both your Self-Assessment Tax Return and Capital Gains Return it is easier for your tax adviser, such as Streets, if you can provide a statement of income and gains ideally through the use of specialist cryptocurrency tax software or cryptocurrency tax calculators.
Crypto Accountant UK, Tax Reporting Made Easier with Recap
We recognise that for some individuals, especially those with a high number and value of transactions, assessing whether they need to report or include cryptocurrency in their tax return can be a challenge, let alone actually compiling an acceptable crypto tax report for HMRC. As such, for those without access to any cryptocurrency tax specialist software, we are delighted to have linked up with Recap.
Recap is a UK-focused crypto tax software solution that simplifies tax reporting and data-sharing.
Recap enables you to:
- Connect wallets and exchanges like Binance, Coinbase, and Kraken
- View your gains/losses and assess whether tax is due
- Generate compliant tax reports based on UK legislation
What Records Do You Need to Keep for Cryptocurrency for Tax Purposes?
You must keep separate records for each transaction, including:
- Type of tokens
- Date you disposed of them
- Number of tokens you’ve disposed of
- Number of tokens you have left
- Value of the tokens in pound sterling
- Bank statements and wallet addresses
- A record of the pooled costs before and after you disposed of them
- HMRC might ask to see your records if they carry out a compliance check.
What Are the Tax Implications of Losses on Cryptocurrency Transactions?
If you realise a loss on any of your chargeable assets, including crypto, you may be able to reduce your total taxable gains.
You can claim losses at any time within four years from the end of the tax year in which the loss was made.
How Do You Determine Tax Due on Cryptocurrency?
For income tax you will need to calculate the income you have received in crypto or generated from your cryptocurrency transactions.
To determine how much Capital Gains Tax is due on your cryptocurrency transactions you’ll need to calculate the gain on each individual disposal.
Your gain is normally the difference between what you paid for an asset and what you sold or traded it for. If the asset was free, you’ll need to use the market value when working out your gain. You do not need to pay Capital Gains Tax on the value of the tokens for which you’ve already paid Income Tax.
You can deduct certain allowable costs, including a proportion of the pooled cost of your tokens, when working out your gain.
You can also use capital losses to reduce your gain, but you’ll need to report them to HMRC first.
If your total taxable gain is above the annual tax-free allowance, you must report and pay Capital Gains Tax.
Need help from a Crypto Accountant Calculating Crypto Tax or Reporting to HMRC?
Speak to our cryptocurrency tax specialists today or email cryptotax@streets.uk to get started with Recap.
Email: cryptotax@streets.uk
Learn more or start your Recap trial: https://recap.io
