Capital Gains Tax (CGT)
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.
HMRC’s view of situs is not based on statute (the law) and there are opposing views on the situs of cryptoassets by well respected professionals and academics. However, if a UK resident non-dom claiming the remittance basis wishes to file their crypto taxes on the basis that their cryptoassets are non-UK based, they should consider disclosing this thoroughly on their UK tax return and anticipate an HMRC investigation to challenge the position.
The tax position regarding individuals trading and investing in derivatives over cryptoassets (ie Contract for Difference (CFD’s), Futures and Margin trading) is different to the tax position of an investor buying and selling cryptoassets.
HMRC refer individuals using derivatives to guidance in their Corporate Finance Manual, which is non-cryptoasset specific. Assuming the individual is not treated as a financial trader, the tax position is unclear. Profits or losses arising from derivatives will be either taxed under the capital gains regime or will be subject to income tax and treated as miscellaneous income.
See our detailed guidance on this.
UK tax resident individuals who are not UK tax domiciled (known as 'Non-doms') potentially benefit from the remittance basis of taxation. Where the conditions are met and they make a remittance basis election, they are only chargeable to UK tax on their overseas income and gains, to the extent that they bring them into the UK. If the overseas income and gains remain overseas, they are outside the scope of UK tax.