Disposals made to a connected party (other than a spouse/civil partner) are deemed to be made at market value at the date of disposal. Any actual consideration given by the connected party for a cryptoasset is ignored.
If there is a gain, it is simply aggregated with the other gains in the year.
If it is a loss, then it cannot be set against other gains in the year. This is called a ‘clogged loss’.
It can only be set against gains to the same connected person at a time when they remain connected:
in the same tax year; or
carried forward to offset against future gains made on disposals to the same person.
These can be gains of any type, such as shares or property; not just cryptoassets.
Who is connected?
For the purposes of capital gains tax, an individual is connected with all of the following:
his spouse or civil partner
his ‘relatives’ (defined as ancestors such as one’s parents or grandparents, lineal descendants such as children or grandchildren, and brothers or sisters)
the spouses or civil partners of his ‘relatives’
the ‘relatives’ of his spouse or civil partners and the spouses or civil partners of these relatives
his business partners, their spouses / civil partners and their ‘relatives’
A taxpayer is not connected with his uncles, cousins, nieces or nephews, as they are not ‘relatives’.