UK Crypto Tax Rates 2023: Full Info & Instructions HMRC

Crypto Taxes in the United Kingdom

The financial year in the UK is from The 6th of April to the 5th of April the following year. Today, some employers are paying salaries in cryptocurrency instead of fiat such as GBP to their employees. HMRC states that crypto received as employment income counts as money’s worth. This means you need to pay Income Tax in addition to National Insurance contributions on the fair market value of the crypto received. If you have received crypto in return for a service, the coins will be subject to Income Tax and should be declared as miscellaneous income.

Crypto Taxes in the United Kingdom

As a result, when you open a position, you will not have to pay any taxes. Only when you close your position will you realise a capital gain or loss and be required to pay Capital Gains Tax on any profits. HMRC has very specific guidance on what constitutes an allowable cost in cryptocurrency.


In both cases, the fair market value is determined on the date of receipt. An update to the blockchain protocol can result in a soft fork or hard fork. A soft fork is an update that automatically gets adopted by all participants (miners, nodes, etc). This does not result in the creation of new tokens or a new blockchain. A hard fork, on the other hand, can result in a blockchain split where new tokens come into existence.

Crypto Taxes in the United Kingdom

In this case, anyone who previously used the Ethereum Naming Service was entitled to claim $ENS tokens. It’s likely that this would be considered a taxable event since the tokens were given in exchange for using a service. However, it’s important to note that certain transactions involving cryptocurrencies may still be subject to VAT. When utilizing cryptocurrencies for payment of goods or services, no value-added tax (VAT) is imposed on the cryptocurrency itself.

How is cryptocurrency taxed in the UK

Chances are that you still own a token that is almost worthless today with very low liquidity and perhaps only traded on a few exchanges. Luckily, HMRC has issued guidance on how to make a negligible value claim on the disposal of such assets which can be used to reduce your total capital gains. If you are gifting cryptocurrency to a person other than your spouse or civil partner, you are required to calculate and report your capital gains. In practical terms, the same principles for selling crypto applies also for gifting crypto. The capital gains are found by comparing the sales proceeds with your allowable costs.

  • Additionally, when you sell or dispose of the crypto, you will be subject to Capital Gains Tax.
  • This situs of exchange tokens is only based on HMRC guidance and has not been specifically legislated for.
  • To properly calculate your capital gains and losses, you need to have records of the price in GBP for every crypto asset you traded or sold at the time of the sale.
  • If an individual runs a business profiting from cryptocurrency trading, income tax rules take priority over capital gains.

Let’s take an example of a crypto investor who buys Ethereum at multiple price points in a given year. The executor or administrator of the estate is responsible for Crypto Taxes in the United Kingdom paying any Inheritance Tax due within six months from the end of the month of death. Beneficiaries do not personally pay this tax; it is deducted from the estate.

How to legally reduce your crypto taxes?

You do not need to pay Capital Gains Tax on the value of the tokens that you’ve already paid Income Tax on. You’ll still need to pay Capital Gains Tax on the gain you make after you’ve received them. Lending collateral to a DeFi protocol typically is not a taxable event. The HMRC has given guidance detailing circumstances when submitting collateral can be considered a taxable disposal, which may occur when your collateral gets moved to another platform. When a user locks up their existing cryptocurrency as collateral, they can receive tokens in return. For example, you could put ETH as collateral and in exchange, receive DAI.

However, your donation will be subject to capital gains tax if the value of your crypto has increased since you originally received it. Some crypto exchanges charge rather high fees, and in some cases even above 2%. If you have a large number of transactions, deducting the exchange fees can make a significant impact on your total tax liability.

In 2022, the UK published new guidance on the tax treatment of earnings from staking and DeFi lending. Essentially, it said that how these assets are taxed should be determined on a case-by-case basis.[1] Some may be taxed as capital assets, while others may be income. The key determining question is whether the crypto is earned in exchange for a service (income) or from an increase in the value of an asset owned by a platform. Crypto donated to charitable organizations is not subject to capital gains tax unless the donation is more than the acquisition cost or unless the donation is tainted. You must only pay capital gains tax on overall gains above the annual exempt amount.

  • You should also include any transaction fees or brokerage fees since such fees are fully deductible and should be included in the cost basis in the UK.
  • This transaction will also necessitate the payment of National Insurance Contribution.
  • Receiving staking rewards in the form of new tokens in your wallet is likely considered ordinary income.
  • However, since Olivia does not have any other capital gains during the tax year, she will not pay Capital Gains Tax since the total gain is within the tax-free allowance of £12,300.
  • HMRC has not released specific guidelines for the treatment of margin and futures trading of cryptocurrencies.
  • You don’t need to file it if your profits are less than the annual CGT allowance (£12,000 in 2019).