Cryptocurrencies/ Cryptoassets

Capital Gains Tax on Cryptocurrencies

HM Revenue & Customs (HMRC) treats cryptocurrencies not as currency, but as investment assets. This means that most crypto transactions are subject to Capital Gains Tax (CGT).

You may need to pay CGT when you:

• Sell your cryptocurrency
• Exchange one cryptocurrency for another
• Use cryptocurrency to pay for goods or services
• Gift cryptocurrency to another person (except gifts to a spouse or civil partner)

How gains are calculated:

Your gain is usually the difference between the amount you paid for the crypto asset and the amount you sold it for. If you received the crypto asset for free, you should use the market value at the time of receipt to calculate the gain.

Income Tax vs. Capital Gains Tax:

Income Tax generally applies only to crypto dealers generating trading profits, such as professional traders or businesses. For most individual investors, CGT will be the main tax to consider.