Disclaimer: This article is intended as an informative piece. This is not accounting or tax advice. Please speak to a qualified tax professional about your specific circumstances before acting upon any of the information in this article.
Capital Gains Tax
Most transactions involving cryptoassets are subject to Capital Gains Tax (CGT). Individuals must calculate the gain or loss they have made whenever they “dispose” of cryptoassets. HMRC guidance confirms that disposals (taxable events) include:
Selling cryptoassets for fiat money (e.g. GBP, USD, EUR)
Exchanging cryptoassets for a different cryptoasset (e.g. exchanging Bitcoin to Ripple)
Using cryptoassets to pay for goods or services (e.g. paying fees on trades, paying fees on withdrawals and deposits of cryptoassets, buying a Starbucks Coffee or paying for accountancy services)
Giving away cryptoassets to another person (there are specific inter-spouse transfer rules for gifting cryptoassets to a spouse or civil partner)
HMRC’s recent DeFi guidance states that some DeFi transactions (even if not via DeFi platforms), might also be subject to capital gains tax, when a change in beneficial ownership takes place upon locking up and unlocking your tokens. Find out more in our DeFi tax guide.
Income Tax
Some returns from crypto activity are treated as taxable income and taxed at your regular income tax rate. HMRC guidance indicates the following crypto activity is likely taxed as income:
Mining rewards
Staking rewards
Liquidity pool rewards
Lending rewards
Taxable airdrops
Referral income
NFTs earned
For more detailed on how different crypto activity should be treated for tax head to our crypto tax guide using the button below.
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