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.

The tax reports we generate give you a total futures and margin gains, and as it is not clear if these are income or CGT the user must choose if to file as misc income or CGT. It would be good to show the reports in article, highlighting where the user must make their own determination.
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Recap treats margin trading as a type of derivative trade. Closing a margin position gives you an overall taxable gain or loss, while also causing capital gains acquisitions and disposals. This can get complex and unpredictable if you settling margin positions in crypto.

Imagine an individual with 1 BTC in their CGT pool that cost £1k, with a current price per BTC of £10k, and a margin trade settled in BTC.If they make a 0.5 BTC profit on their margin trade, there is a £5k gain and an acquisition of 0.5 BTC costing £5k. They have a net gain of £5k and 1.5 BTC in their pool worth £6k.If they make a 0.5 BTC loss on the margin trade, there is a £5k loss and a disposal of 0.5 BTC worth £5k, which results in a £4.5k gain, for a net loss of £500, and 0.5 BTC in their pool worth £500.

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The tax position regarding individuals trading and investing in CFD’s (Contract for Difference), Futures and margin trading is very unclear as there is no HMRC guidance specific to cryptoassets. We have requested written guidance from HMRC but are awaiting a reply.

Assuming the individual is not treated as a financial trader, it is not clear if the gains or losses are to be taxed under the capital gains regime or be treated as miscellaneous income.
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The HMRC Manuals sets out the tax position for Futures (which includes CFD’s) here.

BIM 56100 states ‘Retail contracts for differences are financial futures, and, unless the profits are taxable as trading income, in almost every case TCGA92/S143 charges the outcomes under the capital gains regime (CG56000+). SP03/02 gives guidance on when profits or losses are to be regarded as trading income. However, this was written long before the prevalence of cryptoassets and it was probably expected that most futures would be traded via a recognised futures exchange on the HMRC approved list.

CG56004 confirms that the legislation at Section 143(1) TCGA 1992 was introduced to ensure most transactions (if not trading) are treated as capital gains rather than miscellaneous income. It applies to:

None of the cryptoasset exchanges are on the HMRC list of recognised futures exchanges. Therefore, only over the counter futures, where one of the parties is an authorised person, would seem to be subject to the capital gains tax regime. CG56027 states that ‘You may accept that any reputable financial concern is an authorised person. Any case of doubt or difficulty should be referred to Capital Gains Technical Group.’

We have asked HMRC to issue guidance to clarify which of the current cryptoasset exchanges can be regarded as an authorised person but are awaiting a reply.

It is therefore unclear whether or not gains and losses should be treated as capital gains or miscellaneous income and the individual will need to make their own call on the matter in the absence of guidance from HMRC.

CG56100 confirms that if the transactions are taxed as capital gains ‘all debits and credits to the account, including commission and sums equivalent to interest and dividends, are brought within the computation of the net chargeable gain or allowable loss when the contract is closed out’. It is not clear if the same costs can be deducted if it is treated as miscellaneous income.​

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