Crypto sold for fiat money is treated as a taxable disposal, subject to Capital Gain 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 these disposals are treated as business trading income, subject to income tax and national insurance.
Disposal proceeds of a Fiat Trade
Assuming the capital gains tax treatment applies, the disposal proceeds for fiat trades are below:
Sell for full market value - the disposal proceeds are the sterling equivalent of the fiat money received by the seller.
Sell for less than market value - the disposal proceeds are the sterling market value of the cryptoasset sold, regardless of the fiat money paid to the seller. This is the position whether or not the buyer and seller are connected parties.
Sell to spouse/civil partner- any actual consideration (e.g. payment) received by the seller 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.
Sell to charity/CASC/National Purpose - where the payment by the recipient is more than the allowable CGT costs, there is a capital gain and the disposal proceeds are the actual payment received by the seller. Where the payment is no more than the CGT allowable costs and it is not a tainted donation it is treated as a disposal at no gain and no loss. Therefore the disposal proceeds are deemed to equal the allowable costs.
What if you HODL?
You can hold crypto long term and only need to report for capital gains tax when you make a disposal.
Recap has been designed from the ground up to work out the capital gains impact of every crypto-to-fiat or fiat-to-crypto trade.
Simply connect your exchange accounts or wallets through our automated integrations or enter your data manually via the user interface or CSV file.
Recap automatically generates a disposal when selling a cryptoasset or an acquisition when buying a cryptoasset. 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 trade (example below) in the tax tab or download a PDF tax report