Do you have to pay cryptocurrency taxes in UK? Rules explained

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Cryptocurrency has become a huge topic over the past couple of months.

Thanks to the help of celebrities and the price that continues to rise, some Brits have questioned whether or not to invest.

Recently the price of the cryptocurrency has fallen due to Elon Musk’s Tesla announcement and now some people think this could be one of the best times to invest in Bitcoin or other cryptos.

However, if you are planning to invest or have already invested, you may need to take into account certain tax rules and regulations.

So if you are confused, here are all the UK tax and cryptocurrency rules you need to know so you don’t have a massive bill on your doorstep very soon.

Do you have to pay cryptocurrency taxes in UK?



Do you have to pay taxes on cryptos?

HMRC taxes cryptocurrency based on how you treat the cryptocurrency.

If you hold cryptocurrency as a personal investment, you will be subject to capital gains tax rules. This means that you are taxed on the capital gain when the cryptocurrency is disposed of (e.g., sold, traded, used for a purchase, etc.).

The capital gain is the difference between the GBP value of the asset transferred at the time of disposition minus the GBP value of the asset transferred (how much you paid for it) at the time of its acquisition.

If you trade cryptocurrencies as a business activity, income will be subject to income tax rules.

HMRC does not define what constitutes a commercial activity. Whether or not you are in business depends on the facts and circumstances of each case. HMRC encourages you to review the rules of financial traders to determine if you are trading.


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