Capital Gains Tax
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HMRC expect most individuals with cryptoasset activity to be treated as an investor (for capital appreciation), subject to the capital gains tax regime. Where this is the case, they are liable for capital gains tax on the disposal of cryptoassets.
In exceptional circumstances will a taxpayer be treated as a ‘financial trader’ in cryptoassets. In which case these disposals are treated as business trading income, subject to income tax and national insurance.
Individuals investing in cryptoassets must calculate the capital gain or capital loss they have made whenever they “dispose” of cryptoassets.
HMRC guidance confirms that disposals (taxable events) include:
Selling cryptoassets for fiat money (e.g. GBP, USD, EUR).
Exchanging cryptoassets for a different cryptoasset (e.g. exchanging Bitcoin to Ripple).
Using cryptoassets to pay for goods or services (e.g. paying fees on crypto trades, paying fees on crypto withdrawals and deposits of cryptoassets, buying a Starbucks Coffee or paying for a software subscription.
Giving away cryptoassets to another person is deemed to be a disposal at market value unless to a spouse/civil partner or a qualifying charitable/CASC donation.
Lending out your cryptoassets where there is a transfer of beneficial ownership of the tokens let out to another person, party, protocol or platform.
Staking your cryptoassets where there is a transfer of beneficial ownership of the tokens staked to another person, party, protocol or platform.
Adding and removing your cryptoassets to/from a liquidity pool where there is a transfer of beneficial ownership to another person, party, protocol or platform. There may or may not be redemption/claim tokens received by the provider.
Depositing cryptoassets as collateral for a loan you take out where there is a transfer of beneficial ownership of the tokens locked away to another person, party, protocol or platform. This also includes REPOS.
Moving tokens between wallets owned by the same person does not result in a taxable disposal.
Purchasing cryptoassets is not taxable.
