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Recap HomeCrypto Tax Guide (Lite)HMRC Cryptoassets Manual
  • A Technical Guide to Cryptocurrency Tax for UK Individuals
    • What are Cryptoassets?
    • Who are Recap?
  • CRYPTOCURRENCY TAX
    • Do I Need to Pay Tax on my Cryptoassets?
    • Which Taxes Apply?
      • Capital Gains Tax (CGT)
      • Income tax
      • VAT
      • Inheritance tax
      • Stamp Duty
    • How Much Tax Will I Pay?
    • New HMRC DeFi Guidance
      • Overview of HMRC guidance
      • 1️⃣Is the Reward Income or Capital?
      • 2️⃣Is Beneficial Ownership (BO) transferred?
      • 3️⃣Consider the Tax Treatment
        • Staker/Lender/Collateral Provider
          • Income Rewards
            • BO transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Income Reward
              • Example 1A
              • Example 2A
            • BO not transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Income Reward
              • Example 1B
              • Example 2B
          • Capital Rewards
            • BO transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Capital Reward
              • Example 1C
              • Example 2C
            • BO not transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Capital Reward
              • Example 1D
              • Example 2D
        • Borrower
    • Investor or Trader?
      • Badges of Trade Limitations
      • HMRC Approach
      • Court Cases involving Financial Traders
    • Capital Gains Tax
      • Calculating the Capital Gains Position
      • Disposal proceeds
      • Disposals to Connected Parties
      • Allowable costs for CGT
        • Exchange fees
        • Forks - affect on allowable costs
      • Capital Loss Claims
    • Income Tax
      • Financial trading income
      • Miscellaneous Income
      • Employment income
    • Fair Market Valuation
  • TRANSACTION TYPES
    • 💷Selling Crypto for Fiat
    • 🔄Trading Crypto to Crypto
    • 🛍️Purchases using Crypto
    • 🎁Gifts
    • 💍Spouse Transfers
    • 🎗️Gifts to Charity, CASCs & Bodies for a National Purpose
    • 🎈Airdrops
    • 🤝Staking
    • 💸Transfers
    • 🍴Forks
    • ⛏️Mining
    • 👛Employment income
      • UK Employer
      • Overseas employer
      • National Minimum Wage (NMW)
    • 🚨Lost & Stolen Crypto
    • 🎲Gambling
    • 💧Liquidity Pools
      • Example - Liquidity pool
    • ⬆️Token Upgrades/Swaps
    • 🔮Cryptoasset derivatives (CFDs, Futures and Margin Trading)
    • 💼Crypto Loans
    • 🔄REPOS
    • 🪞Reflections Rewards
    • 👥Referral Income
    • 💳Cashback
    • 🎨NFTs (Non Fungible Tokens)
    • 🎮NFTs earned playing games
  • Record Keeping
  • Filing Your Self-Assessment
    • How to Register for Self-Assessment
    • How to Fill In the Tax Return
    • Submitting the Tax Return and Paying the Tax
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  1. CRYPTOCURRENCY TAX
  2. Capital Gains Tax
  3. Allowable costs for CGT

Exchange fees

HMRC has also set out which exchange fees can and cannot be deducted from gains as an allowable incidental cost. Below is a list of common fees charged by exchanges and whether or not they are an allowable incidental cost:

Situation in which an exchange fee may be incurred
Tax Treatment of fee for CGT purposes

GBP for FX - Exchange (swap) sterling for a fiat currency other than sterling (ie USD or EUR)

Not allowable – not an allowable incidental cost of acquiring or disposing of a cryptoasset token

FX for GBP - Exchange (swap) fiat currency other than sterling (ie USD or EUR) for sterling

Not allowable – not an allowable incidental cost of acquiring or disposing of a cryptoasset token

Deposit GBP - Deposit sterling with an exchange

Not allowable - Sterling isn’t an asset for CGT purposes so it is not an allowable cost

Deposit FX - Deposit fiat currency other than sterling (ie USD or EUR) with an exchange

Not allowable - the depositor retains beneficial ownership of the fiat currency (ie USD), so there’s no acquisition or disposal that the costs can be attributed to

Trade token swap - Exchange (swap) token A for token B

Allowable - the fee paid is in relation to the whole of the transaction, that is for a disposal of one asset and the acquisition of another asset. This means that the fee is attributable to both assets. HMRC’s view is that this fee would be allowable as a deduction in computing the disposal in respect of token A, and that it would be allowable as a deduction in computing the eventual disposal of token B. However, a sum may be allowed as a deduction only once in computing a disposal. Therefore the cost should be apportioned between both assets (Token A and Token B) on a just and reasonable basis. HMRC will accept apportioning this fee equally between the assets disposed of and the assets acquired (that is a 50/50 split), or a different approach will be considered if it is just and reasonable.

Trade for GBP - Dispose of tokens for sterling

Allowable - this is as an incidental cost of disposing of the tokens

Trade for FX - Dispose of tokens for fiat currency other than sterling (ie USD or EUR)

Allowable - this is as an incidental cost of disposing of the tokens

Withdrawal of GBP - Withdraw sterling from the exchange

Not allowable - Sterling isn’t an asset for CGT purposes so not an allowable cost

Withdrawal of FX - withdraw fiat currency other than sterling (ie USD or EUR) from the exchange

Not allowable - the withdrawer retains beneficial ownership of the fiat currency other than sterling so there’s no acquisition or disposal that the costs can be attributed to

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Last updated 3 years ago

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