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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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  • Disposal proceeds of a Fiat Trade
  • Fiat Trades in Recap

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  1. TRANSACTION TYPES

Selling Crypto for Fiat

PreviousFair Market ValuationNextTrading Crypto to Crypto

Last updated 3 years ago

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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.

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.

  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 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.

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

- the disposal proceeds are the sterling market value of the cryptoasset sold, regardless of the fiat money paid to the seller.

- 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.

- 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.

Fiat Trades in

💷
Sell to connected person (not spouse/civil partner)
Sell to spouse/civil partner
Sell to charity/CASC/National Purpose
Recap
Cypto to fiat trade tax