Cryptoasset tax, also known as cryptocurrency or tokens, can be subjected to 2 types of tax in the UK.  They are Income Tax and Capital Gains Tax.

If your cryptocurrency is treated as an Income Tax, you will have to submit the amount of tax depending on your Income Tax Band bracket which is shown in the table below.

Band Taxable income Tax rate
Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £150,000 40%
Additional rate over £150,000 45%

For example, if your income is £52,000 in the financial year the taxable rate would be 40%.

If you earned £8000 in the financial year in cryptocurrency you would have to pay 40% which would be £3200 tax on your crypto investment.

If you are selling, trading, spending, or gifting cryptocurrency in the UK you will have to pay Capital Gains Tax.  This is calculated by the amount of profit that is made on a crypto investment and applying the Capital Gains Tax rate to that profit.  There is a Capital Gains Tax exemption of up to £12,300 but after that the rates are shown in the table below.

Band Taxable Income Tax Rate
Personal Allowance Up to £12,300 0%
Basic Rate Income Band Up to £50,700 10%
Higher Rate Income Band Up to £150,000 20%
Additional Rate Income Band More than £150,000 20%

Once again, the amount of Capital Gains Tax you would have to pay on your cryptocurrency depends on how much you earn in the UK.

If you was earning under £50,270 you would be paying the Basic-Rate Income Band of 10%.  If you purchased cryptocurrency for £10,000 with transaction fees of £1000 then your cost basis would be £11,000.

If you sold your cryptocurrency for £30,000, you would have to deduct £11,000 from £30,000 leaving you with a capital gain of £19,000.

You have a Personal Allowance of £12,300 which needs to be deducted from your capital gain of £19,000 leaving a capital gain of £6,300 that you would have to pay Capital Gains Tax.  You would have to pay 10% of £6,300 = £630 Capital Gains Tax.

Contact Tax Advisory UK and we will arrange a meeting with some of the UK’s best Chartered Tax Advisors who will help you with all your cryptocurrency tax enquiries.  Please call 0203 965 3892.

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