Using cryptoassets to pay for goods or services is a taxable disposal, subject to capital gains tax (unless treated as a ‘financial trader’ in cryptoassets).
Only in exceptional circumstances will a taxpayer be treated as a ‘financial trader’ in cryptoassets. In which case depending on the circumstances, these disposals may be treated as business trading income, subject to income tax and national insurance.
Tax Treatment of Purchases made with Crypto
This is a barter transaction and is treated as though you had sold the cryptoassets to the person providing the goods or services and then used the fiat money they gave you to purchase their goods or services.
Paid full market value - the disposal proceeds are the sterling market value of the cryptoassets disposed of (or more simply valued as the cost of the goods or services purchased).
Paid below market value - the disposal proceeds are the sterling market value of the cryptoassets disposed of, rather than the cost of the goods or services purchased.
Buy from spouse/civil partner - any actual consideration changing hands and the market value is ignored. There is no gain and no loss, provided the detailed rules are met. Therefore the disposal proceeds are equal to the sterling allowable costs of the seller.
Buy from a charity/CASC/National Purpose- if the worth of the goods or services provided by the recipient is more than the capital gains tax allowable costs, there is a capital gain and the disposal proceeds are the sterling equivalent of the actual goods and services received by the seller. See detailed guidance on this.
Recap has been designed from the ground up to work out the capital gains impact of purchasing goods and services using cryptoassets.
Simply connect your exchange accounts or wallets through our automated integrations or enter your data manually via the user interface or CSV file.
Recap treats the purchase of goods/services with cryptoassets as if you have sold cryptoassets for GBP at market value. All GBP valuations of the assets are determined by Recap's own market valuation engine using both foreign and cryptocurrency exchange rates.
See the tax impact of every purchase (example below) in the tax tab or download a PDF tax report