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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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  • Tax Treatment of Purchases made with Crypto
  • Purchases in Recap

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  1. TRANSACTION TYPES

Purchases using Crypto

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Last updated 3 years ago

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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.

Recap has been designed from the ground up to work out the capital gains impact of purchasing goods and services using cryptoassets.

  1. Simply connect your exchange accounts or wallets through our automated integrations or enter your data manually via the user interface or CSV file.

  2. 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.

  3. See the tax impact of every purchase (example below) in the tax tab or download a PDF tax report

the disposal proceeds are the sterling market value of the cryptoassets sold, rather than the cost of the goods or services purchased.

- 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.

- 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.

Purchases in

🛍️
Buy from connected person (non spouse/civil partner) -
Buy from spouse/civil partner
Buy from a charity/CASC/National Purpose
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