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Calculating the Capital Gains Position
The allowable costs are deducted from the disposal proceeds, to calculate the capital gain or capital loss on each and every disposal made in the tax year.
The capital gain or loss needs to be calculated for each disposal, although disposals on the same day of the same type of cryptoasset can be aggregated.
Assuming there are no disposals to connected parties, any capital losses in the tax year are deducted from the capital gains in the tax year.
The annual Capital Gains Tax exemption is £12,300 for tax years 2021/22 and 2022/23.
If the net capital gain (after the offset of capital losses in the year) is more than the annual CGT exemption, the excess is subject to capital gains tax for a UK individual taxpayer; unless it can be reduced by capital losses brought forwards from a prior tax year.
Brought forward losses can only be used if they have been declared to HMRC previously on a Tax Return or by letter.
If the net capital gain is less than the annual CGT exemption, no CGT is payable.
For further details on when and how to report gains and losses to HMRC, when to register with HMRC and when to pay the tax:
The Recap Capital Gains Tax downloadable pdf report provides a summary of all the relevant information to be included on your annual Self Assessment Tax Return.
The intention is that you pass our report to your accountant and they will be able to complete the Tax Return and advise on your tax position, based on your specific circumstances.
A capital gain or capital loss is calculated for every disposal and detailed tax calculations are also included in the report. You will have a full audit trail in case HMRC decide to investigate the capital gains entries on your Tax Return.
Recap can also provide a record of the allowable costs of the cryptoassets still held, via the Acquisitions Report.
The rate of CGT payable on disposals of cryptoassets depends on your other income and capital gains in the tax year.
See our further guidance on this.