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Guide to Crypto Taxes in the UK

Written by:

Eivind Semb

Last updated:

Have you either invested in or traded cryptocurrency during the last year and now wonder if you need to pay any taxes on your crypto in the United Kingdom? Her Majesty’s Revenue and Customs (HMRC) has published guidelines and a Cryptoassets Manual detailing how cryptocurrencies are taxed in the UK. The most important takeaway is that all individuals are taxed at the time when disposing of an asset.

In this complete tax guide, we will explain everything you need to know about how crypto is taxed in the UK, how much tax you must pay on your crypto gains, how HMRC treats crypto income such as staking and airdrops, how to report your crypto taxes to HMRC, and how you can save both time and money using cryptocurrency tax software to calculate your gains and losses.

Just a heads up! This guide is quite extensive due to the complex nature of cryptocurrency taxes. While we recommend reading this guide from A to Z the first time to make sure you don’t miss out on anything that is important to your situation specifically, you can also use the menu navigation on the right side to jump to any specific crypto tax question later.

We are also updating this guide regularly based on the latest tax guidelines and rules from HMRC. All updates will be listed below so that you can quickly see if anything has been updated since your last visit:

Latest updates

  • June 28, 2022: Updated for 2021/2022
  • May 28, 2021: Updated for 2020/2021
  • June 5, 2020: Updated for 2019/2020
  • May 27, 2019: The first version published

Let’s start with the most important question of all…

Is crypto taxed in the UK?

Yes. You have to pay tax on your cryptocurrencies in the UK. Any crypto disposed of during the tax year must be reported in the Self Assessment.

In the next section, we will look closer at what types of transactions are considered disposal and the difference between Capital Gains Tax and Income Tax.

How is crypto taxed in the UK?

In general, your crypto will be taxed as Capital Gains Tax when disposed of. HMRC has defined disposal in the Cryptoassets Manual as the following:

  • selling crypto assets for money
  • exchanging crypto assets for a different type of crypto asset
  • using crypto assets to pay for goods or services
  • giving away crypto assets to another person

Your capital gains are in general calculated as the difference between the GBP value of the sales proceeds and the acquisition cost of the disposed asset.

However, if you are considered to be an active or professional trader you will be subject to Income Tax treatment instead of Capital Gains Tax. Any crypto received as income will also be subject to Income Tax.

We will go into more detail about both Capital Gains Tax and Income Tax in the next sections.

Cryptocurrency tax rates in the UK

There are different tax rates for Capital Gains Tax and Income Tax. How much tax you must pay depends on which tax band you fall under. To understand how much tax you must pay on your capital gains you need to first calculate your total taxable income. The different Capital Gains Tax rates can be seen in the table below:

Capital Gains Tax rates

Capital Gains Tax RateBandTaxable Income
10%Basic rate£12,571 to £50,270
20%Higher rate£50,271 to £150,000
20%Additional rateover £150,000
This table shows the Capital Gains Tax rates and tax bands for 2022. Source: 1, 2

This means that for the 2021/2022 tax year, Capital Gains Tax rates for cryptocurrencies in the UK are:

  • 0% if the entire capital gain is below the tax-free allowance
  • 10% for your entire capital gain if your total taxable income is below £50,270
  • 20% for your entire capital gain if your total taxable income is above £50,270

Be aware that even if your total capital gains do not exceed the tax-free allowance, you might still need to report your gains. If the total proceeds from the sale of cryptocurrencies in a given tax year exceed four times the Annual Exempt Amount (4 * £12,300 = £49,200) you are required to report the gains on your tax return.

Income Tax rates

While the Capital Gains Tax rate is capped at 20% maximum, the Income Tax rate is capped at 45% for taxable income over £150,000. The different Income Tax rates can be seen in the table below:

Income Tax RateBandTaxable Income
0%Personal Allowanceup to £12,570
20%Basic rate£12,571 to £50,270
40%Higher rate£50,271 to £150,000
45%Additional rateover £150,000
This table shows the Income Tax rates and tax bands for 2022. Source: 1, 2

Capital Gains Tax allowances

In the UK, you only pay Capital Gains Tax on your gains above the tax-free allowance. For the 2021/2022 tax year, the capital gains tax-free allowance is £12,300. This amount is applicable for capital gains across all capital assets. This allowance is also sometimes referred to as the Annual Exempt Amount.

uk tax free allowance
Allowances for tax-free capital gains in the UK by year. Source: HMRC

How to calculate capital gains UK

As we have already mentioned, you must calculate capital gains every time a cryptocurrency is sold, traded, swapped, or otherwise disposed of.

The general formula for calculating capital gains is:

capital gains = selling price – purchase price

To work out the capital gains we need to first calculate the selling price and purchase price (cost basis) for each transaction. The selling price is what you sold the asset for and can usually be calculated by looking up the market rate in GBP at the time of the transaction.

The cost basis is what you originally purchased the asset for. You should also include any transaction fees or brokerage fees since such fees are fully deductible and should be included in the cost basis in the UK. If you received the cryptocurrency from an airdrop, staking or interest payment, you should simply calculate the cost basis as the fair market value in GBP on the day you received the asset.

If you made a profit when disposing of your crypto, you have made a capital gain and you must pay Capital Gains Tax on that gain. If you instead made a loss, you have made a capital loss on that transaction and you do not pay Capital Gains Tax. However, it’s important to keep track of your capital losses since these can be used to offset your capital gains. We will explain this in more detail later in this guide.

Calculating capital gains and losses is actually not so complicated if you only have a few transactions. However, if you have hundreds if not thousands of transactions spread on different exchanges and wallets, things start to become a lot more complicated.

Share pooling cost basis method

HMRC has stated that the concept of pooling should be used in the UK to calculate the cost basis of cryptocurrencies. According to HMRC, this method allows for simpler Capital Gains Tax calculations and applies to shares of companies and also “any other assets where they are of a nature to be dealt in without identifying the particular assets disposed of or acquired”. HMRC goes on to say that cryptocurrencies fall within this description and should therefore be pooled.

In practical terms, this means that each cryptocurrency you have bought, traded, or sold has its own pool and associated pooled allowable cost. The pool consists of the total number of coins you own, and the allowable cost is the total amount originally paid. Each time you buy or sell a cryptocurrency, the pool and associated cost will therefore change. Coinpanda updates the pool and associated cost automatically for each transaction for UK users.

If only some of the coins you own are sold, it will be considered a part-disposal. In this case, capital gains are calculated by considering a corresponding proportion of the total pooled allowable cost. This method is sometimes also referred to as a “Section 104 Pool” and is similar to the Average Cost Basis method.

Example: Share pool and total allowable cost

Henry bought 2 BTC for £6,000 in 2017. In 2018 he bought another 1.5 BTC for £9,000. By applying the concept of pooling, Henry has now a pool of 3.5 BTC and a total allowable cost equal to £15,000.

Later in 2022, Henry decides to cash in some profits and sell a part of his Bitcoin investment. He sells 2.5 BTC for £75,000. His transactions can be seen in the below table:

TypeDateAmountPriceCost BasisCapital Gains
Buy2017-06-082.0 BTC£6,000£6,000
Buy2018-04-171.5 BTC£9,000£9,000
Sell2022-02-182.5 BTC£75,000(?)(?)

To calculate his capital gains, Henry needs to find the less allowable cost (cost basis) for his disposal of 2.5 BTC: £15,000 * (2.5 / 3.5) = £10,714. The total capital gain is then found as £75,000 – £10,714 = £64,286.

TypeDateAmountPriceCost BasisCapital Gains
Buy2017-06-082.0 BTC£6,000£6,000
Buy2018-04-171.5 BTC£9,000£9,000
Sell2022-02-182.5 BTC£75,000£10,714£64,286

After the sale, Henry has 1 BTC left in his pool and a total allowable cost of £15,000 – £10,714 = £4,286.

Special rules to prevent wash sales apply to cryptocurrencies in a similar way to shares of companies. HMRC has implemented these rules to prevent people from selling a crypto asset (or share) and repurchasing it shortly after with the intention of realizing losses and therefore reducing the total capital gains.

When you spend, sell or trade a cryptocurrency, you need to calculate the capital gains by disposing of the coins in the following order:

  1. Same-day rule: coins bought on the same day as the sale
  2. 30-day rule: coins acquired within 30 days of the sale
  3. Total pool: all coins previously acquired

Buying a crypto asset on the same day

If you sell a cryptocurrency and buy the same coin on the same day, the cost basis will not be calculated from the main pool. Instead, the cost basis is calculated using the costs of the new tokens bought. This is done by considering all purchases on the same date – even if the acquisition has happened before you dispose of the asset.

If you have made multiple purchases at different prices on the same day, the cost basis is calculated by finding the average acquisition cost. See HMRC Capital Gains Manual for more information.

Buying the same crypto asset within 30 days

Similar to the same-day rule, the 30-day rule says that any cryptocurrency acquired within 30 days of the sale should be considered for calculating cost basis instead of the main pool. Rather than calculating the average acquisition cost as done for the same-day rule, First-in-first-out (FIFO) logic should be applied for calculating the cost basis for the 30-day rule. The 30-day rule is sometimes also referred to as the “bed and breakfast rule”.

If any of the special rules above apply, and the number of coins sold exceeds the number of new coins acquired, the total calculation will also include the acquisition cost from the total pooled allowable cost.

We will explain these rules better using a practical example:

Example: The 30-day rule explained

Sara invested in Ethereum in August 2021 and has a total of 15 ETH in her wallet. She has spent a total of £25,000 acquiring the coins. This amount is therefore her pooled allowable cost.

Later, she decides to sell some of her initial investment. On January 15th, 2022 she sells 10 ETH for £30,000.

A few weeks later she decides to buy back some of the Ethereum she sold. On February 3rd she buys 5 ETH for £17,000.

Her transaction history can be seen in below table:

TypeDateAmountPriceCost BasisCapital Gains
Buy2021-08-0115 ETH£25,000£25,000
Sell2022-01-1510 ETH£30,000(?)(?)
Buy 2022-02-035 ETH£17,000£17,000

Because the newly acquired ETH were bought within 30 days of the disposal, they will not be considered as part of the total pool. To calculate her capital gains from the sale of 10 ETH she needs to treat this as two separate disposals:

  • 5 ETH that was bought after the disposal
  • 5 ETH from the total pool

The cost basis for the 5 ETH bought on February 3rd is considered in the calculations using the 30-day rule. For the remaining 5 ETH, we find the cost basis from her pooled allowable cost.

Total cost basis will be £17,000 + £25,000 * 5 / 15 = £25,333. Her total capital gains are therefore found as £30,000 – £25,333 = £4,667.

TypeDateAmountPriceCost BasisCapital Gains
Buy2021-08-0115 ETH£25,000£25,000
Sell2022-01-1510 ETH£30,000£25,333£4,667
Buy 2022-02-035 ETH£17,000£17,000

Sara still has 10 ETH in her pool which after the disposal has an allowable cost of £16,667.

For more information about how cost basis is calculated in the UK, see our detailed guide to UK cost basis here:

Is buying crypto taxed in the UK?

The answer is that it depends. More specifically, it depends on what currency is used to purchase the other cryptocurrency. As in most countries, different tax rules apply if you are paying for a cryptocurrency with fiat currency such as GBP or using another cryptocurrency.

Buying cryptocurrency with fiat currency (Ex: GBP → BTC)

You are not taxed when buying cryptocurrency with fiat in the UK. Note that it’s important to keep track of all your purchases and complete transaction history so that you can calculate the cost basis correctly when you later sell the cryptocurrency that was purchased.

blue tax icon

Tax status:

Not taxed

Buying crypto and paying with another crypto (Ex: BTC → SOL)

HMRC considers buying one cryptocurrency and paying with another cryptocurrency a taxable event since you are in fact disposing of a cryptocurrency. This means that every time you trade two cryptocurrencies, such as when exchanging Bitcoin for Solana, you need to calculate the capital gains for the crypto asset sold – BTC in this example. This includes also stablecoins which are treated similarly to other crypto assets for tax purposes.

You need to first calculate the fair market value (FMV) and the cost basis of the cryptocurrency sold according to the Share Pooling method. The capital gains can then be found directly as the cost basis subtracted from the FMV. If you have made a gain, you will need to pay Capital Gains Tax. If you have made a loss, you can offset your other gains with this loss.

blue tax icon

Tax status:

Capital gains tax

Is selling crypto taxed in the UK?

Selling cryptocurrency for fiat currency (Ex: BTC → GBP)

Yes, selling cryptocurrency such as Bitcoin for fiat currency (eg. GBP) is considered a taxable event in the UK. If you have sold any crypto asset and received fiat in return, you will need to calculate the capital gains for each transaction and report this in your tax return to HMRC.

blue tax icon

Tax status:

Capital gains tax

Selling crypto for another crypto (Ex: ETH → BTC)

HMRC defines “exchanging crypto assets for a different type of crypto asset” as a disposal. A crypto-to-crypto transaction (trading) is therefore considered a taxable event similar to selling cryptocurrency for fiat currency.

blue tax icon

Tax status:

Capital gains tax

Important note: Stablecoins such as Tether (USDT), USD Coin (USDC), and TrueUSD (TUSD) are treated similarly to any other cryptocurrency by HMRC, hence all transactions where a stablecoin is disposed of are considered a taxable event similar to crypto-to-crypto transactions.

Example

Olivia exchanges 0.3 BTC for 15 LTC. Her original cost of 0.3 BTC was £1,500. At the time of the exchange, 15 LTC is valued at £2,300. This means that the sales proceeds for selling 0.3 BTC are £2,300 and the cost basis is £1,500. The resulting capital gains are calculated to be £2,300 – £1,500 = £800.

Assuming that Olivia is in the basic rate tax band, she will pay 10% on all her capital gains. However, since Olivia does not have any other capital gains during the tax year, she will not pay Capital Gains Tax since the total gain is within the tax-free allowance of £12,300.

Tax on margin and futures trading UK

HMRC has not released specific guidelines for the treatment of margin and futures trading of cryptocurrencies. This type of trading has become very popular in the last few years since you have the opportunity to borrow funds to increase your trading positions which can result in higher profits – but at a higher risk of course.

If you are considered to be a financial trader by HMRC, you should report your gains as income on your tax return and pay Income Tax. If you are not considered to be a financial trader, HMRC is not clear whether your gains and losses are subject to Capital Gains Tax or should be declared as income. It is our interpretation that the safest approach is to report your gains and losses from margin trading as capital gains.

For more information about taxes on cryptocurrency margin and futures trading, please refer to our detailed article on this topic:

Taxes on crypto mining in the UK

Cryptocurrency received from mining activity is generally treated as income for tax purposes by HMRC. This means that you must report cryptocurrency received from mining in your tax return and pay tax according to the tax band you fall under. However, different tax rules apply if HMRC considers the activity to be classified as a business or just a hobby. This depends on several factors such as:

  • Degree and frequency of activity
  • Level of organization
  • Associated risks
  • Commerciality of the operation

Mining cryptocurrency as a hobby

If your mining activity is classified as a hobby, you should declare the GBP value at the time of receipt of all crypto assets received from mining as miscellaneous income on your tax return. You are allowed to include any appropriate expenses to reduce the net income amount.

If you decide to keep the crypto assets in a wallet, they will be part of your pool and the GBP value will be included in the total allowable cost for that specific cryptocurrency. If you decide to sell the coins in the future, you may have to pay Capital Gains Tax if the cryptocurrency has appreciated in value. On the other hand, if the cryptocurrency has depreciated in value, you will realize a capital loss that can be used to offset other capital gains.

blue tax icon

Tax status:

Income tax / Capital gains tax

Mining cryptocurrency as a business

If HMRC deems the mining activity to be a business, the mining income should be reported as trading profits and is therefore subject to Income Tax. Similar to mining classified as a hobby, you can deduct appropriate expenses to reduce the net taxable amount.

If you sell the coins at a later date in the future, any gains from the disposal will be added to your trading profits and taxed as income.

blue tax icon

Tax status:

Income tax

Taxes on crypto staking in the UK

Tax rules for cryptocurrency earned from staking are in fact identical to cryptocurrency received from mining. This means that the activity will be classified as either a business or just a hobby. In both cases will the cryptocurrency received attract Income Tax, but the amount of tax you must pay will depend on how HMRC classifies the activity.

Tax on airdrops and hard forks

HMRC has released clear guidance on the treatment of cryptocurrency received as both airdrops and hard forks. In this section, we will take a closer look at the tax treatment of such transactions.

Tax on airdrops

If you have received crypto in return for a service, the coins will be subject to Income Tax and should be declared as miscellaneous income. If you are operating a business, they will be part of your trading profits.

However, HMRC says that Income Tax may not apply if any of the following conditions apply:

  • You have received crypto without doing anything in return
  • The crypto received is not part of a trade or business involving mining

Something to keep in mind is that if you decide to sell the coins at a later time, the gains will be subject to Capital Gains Tax. This means that even though an airdrop is not taxed as income, the coins are tax-free only until you later sell or otherwise dispose of them.

blue tax icon

Tax status:

Income tax

Example

Charlie received 400 UNI tokens from the Uniswap airdrop in September 2020. This airdrop does not qualify for being tax-free since the airdrop was only given to people that had used the Uniswap protocol prior to the snapshot date.

On the date Charlie claimed the airdrop, each token was valued at approximately £15 such that the fair market value of the total airdrop was £6,000. This must be reported as miscellaneous income and Charlie must pay Income Tax on the total amount according to his Income Tax band.

Charlie earns £38,000 during the tax year and is therefore in the basic rate band. He will therefore pay 20% tax on £6,000 which equals £1,200.

Tax on hard forks

An update to the blockchain protocol can result in a soft fork or hard fork. A soft fork is an update that automatically gets adopted by all participants (miners, nodes, etc). This does not result in the creation of new tokens or a new blockchain. A hard fork, on the other hand, can result in a blockchain split where new tokens come into existence.

If you owned tokens on the original blockchain before the hard fork or split occurred, you will in most cases own an equal number of tokens on both blockchains after the event. An example of a blockchain split is Bitcoin Cash which was created in August 2017 when a group of miners decided to fork the original Bitcoin blockchain. If you held 1 BTC at the time of the hard fork, you would own both 1 BTC and 1 BCH after the event.

To avoid confusion for UK taxpayers, HMRC has provided clear guidance on the tax treatment of blockchain forks in their Cryptoassets Manual. After the fork, each crypto asset goes into its own pool. The total allowable cost associated with the original pool should be split between the two assets. HMRC has not defined specific rules for how the cost should be split but has stated that costs must be split on a “just and reasonable basis under section 52(4) Taxation of Capital Gains Act 1992“.

The most commonly used approach is that the cost of the original crypto is apportioned between the old and new assets based on the asset’s fair market value the day after the hard fork. You can also assign 100% of the cost to the original crypto asset, such that the new crypto asset created after the fork will have a zero cost associated with the new pool.

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Tax status:

Not taxed

Other taxable transactions

We have so far covered some of the most typical cryptocurrency transactions you might have to consider when it comes to understanding crypto taxes in the UK. There are also many other different ways that you can either send or receive crypto that might have implications for your tax situation. Below, we will comment briefly on the tax treatment of other ways to interact with crypto not already mentioned.

Tax on ICOs & IEOs

ICOs (“Initial Coin Offerings”) and IEOs (“Initial Exchange Offerings”) are a popular form of raising capital by companies and projects launching their own blockchain or token. In both cases, a person typically invests in a token that will be released in the future and pays with another cryptocurrency like USDC or ETH. An IEO differs from an ICO that it is conducted by an exchange, and the token is in most cases listed on the exchange shortly after the IEO has concluded.

HMRC has not provided specific guidance for the treatment of ICOs or IEOs, but since this is very similar to a crypto-to-crypto transaction, the same taxation principle applies. If you invest in token XYZ and pay with ETH, you will have to calculate capital gains on the ETH disposed of. You should use the fair market value of ETH on the date you made the investment which will also become the cost basis (or allowable cost) of the pool for the purchased tokens.

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Tax status:

Capital gains tax

Gifting cryptocurrency

If you are gifting cryptocurrency to a person other than your spouse or civil partner, you are required to calculate and report your capital gains. In practical terms, the same principles for selling crypto applies also for gifting crypto. The capital gains are found by comparing the sales proceeds with your allowable costs. You should use the fair market value in GBP on the date that you made the transfer to calculate the sales proceeds.

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Tax status:

Capital gains tax

Donating crypto to charity

You do not have to pay any Capital Gains Tax on crypto assets donated to charity. However, there are two exceptions to this rule:

  • If you make a tainted donation. This refers to an arrangement to obtain certain financial advantages from a charity.
  • If the fair market value of the assets disposed of is higher than the acquisition cost found from your pooled allowable cost.

In either of the above cases, you most likely need to report and pay Capital Gains Tax on the gains. More information about donations and taxes can be found here.

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Tax status:

Capital gains tax

Tax on received interest

Have you received interest from lending out your cryptocurrency? If so, you will need to treat this similar to cryptocurrency received from mining or staking. This means you should report the interest received as miscellaneous income on your tax return.

blue tax icon

Tax status:

Income tax

Tax on salary paid in crypto

Today, some employers are paying salaries in cryptocurrency instead of fiat such as GBP to their employees. HMRC states that crypto received as employment income counts as money’s worth. This means you need to pay Income Tax in addition to National Insurance contributions on the fair market value of the crypto received.

The same rules apply to both employees and freelancers. In both cases, the fair market value is determined on the date of receipt.

blue tax icon

Tax status:

Income tax

Lost and stolen crypto

Losing private keys

If you lose your private keys and cannot access the cryptocurrency anymore, the asset is still technically owned by you since it exists on the blockchain. Because of this, HMRC does not consider the misplacing of private keys a disposal that triggers Capital Gains Tax.

If there is no possibility of recovering the private keys and gaining access to the assets in the wallet, you have the option to make a negligible value claim which we will explain in the next section. This means that the loss can be used to offset your total capital gains if the claim is approved by HMRC.

Being defrauded

Unfortunately, there are many fraudulent actors with bad intentions in the cryptocurrency community. A lot of people have been scammed by such people, often by transferring Bitcoin or Ethereum to an address with the hope of getting more value back.

HMRC does not consider fraud or theft to be a disposal since you still have the right to recover the crypto, and therefore also are the rightful owner of the assets. The implications of this are that you cannot claim a loss for the purpose of reducing your capital gains.

If you pay for a cryptocurrency and it turns out to be almost completely worthless, you can make a negligible value claim and reduce your capital gains if HMRC accepts the claim.

Minimize your taxable gains

There are a few ways you can minimize your taxable gains and reduce your tax burden. In this section, we will look at the three most commonly used methods that are allowed in the UK.

Offset capital gains

If you sell a cryptocurrency and receive less than the calculated cost basis, you will have realized a capital loss on the asset. Such losses can be used to offset your total taxable gains, either in the same tax year or in future tax years.

Losses must be claimed by including them on your tax return. HMRC says that you don’t necessarily need to report losses straight away, and you can actually claim losses up to four years after the end of the tax year that you sold the asset. This means that if you have unclaimed losses from 2022, you can use these losses to offset other capital gains for the tax year 2023/2024 or 2024/2025 for example.

Trading fees

In most cases, you will be paying trading fees when you are buying, selling, or trading cryptocurrency. Trading fees are considered allowable costs by HMRC and can be deducted from the sales proceeds amount.

Some crypto exchanges charge rather high fees, and in some cases even above 2%. If you have a large number of transactions, deducting the exchange fees can make a significant impact on your total tax liability. Most crypto tax calculators like Coinpanda do this automatically for you.

Low value and illiquid cryptocurrencies

A significant amount of crypto assets have lost almost all their value since the all-time high (ATH) value. Chances are that you still own a token that is almost worthless today with very low liquidity and perhaps only traded on a few exchanges. Luckily, HMRC has issued guidance on how to make a negligible value claim on the disposal of such assets which can be used to reduce your total capital gains.

To do this, simply fill out the claim by entering information such as the name of the cryptocurrency and the value that the asset should be treated as disposed of. If the crypto has practically no liquidity, you can normally consider the value to be £0.

How to calculate crypto taxes in the UK

Calculating your crypto taxes and figuring out the numbers you must report to HMRC can seem like an overwhelming task for most people. There are essentially two ways of doing your crypto taxes: either manually or using a cryptocurrency tax calculator like Coinpanda.

Let’s start with the most time-consuming method…

Calculating your crypto taxes manually

Here are the steps you must take to calculate your crypto taxes manually:

  1. Download the transaction history from all exchanges where you have bought, sold, received, or sent any cryptocurrency. This includes also transactions from or to your own wallets.
  2. Calculate the cost basis for every single transaction where cryptocurrency is disposed of according to Share Pooling rules
  3. Calculate the proceeds (sales price) and resulting capital gains for all transactions that are considered taxable disposals by HMRC
  4. Identify all transactions subject to Income Tax in the UK
  5. Summarize all the calculations to find the total capital gains and your taxable income during the financial year

Calculating your crypto taxes using crypto tax software

The best option for most people in the UK is likely going to be using cryptocurrency tax software to automatically do the required calculations. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically:

1. Sign up for a 100% free account

It is 100% free to create a Coinpanda account and you don’t need to enter any credit card information to get started. The free plan lets you explore and use all features for free.

Sign up with Coinpanda for free now!

dashboard 2022
The Coinpanda dashboard page

2. Connect all your exchange accounts and wallets

Coinpanda supports more than 500+ exchanges, wallets, and blockchains today. You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda doesn’t support an exchange you have used, reach out to us so we can add the integration (usually within a few days).

3. Wait for Coinpanda to crunch all the numbers

Get yourself a cup of your favorite beverage and wait for Coinpanda’s sophisticated calculation engine to crunch all the numbers for you. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions! This might take anywhere from 20 seconds to 5 minutes depending on how many transactions you have.

4. Check for any reported warnings

Coinpanda will automatically display a warning if it appears that one or more transactions are missing such that the cost basis calculations will not include the total purchase price. If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts.

Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through the Live Chat.

5. Download your tax reports and tax forms

When you have successfully imported all transactions, the final step is to download the tax reports you need to file your taxes to HMRC. Coinpanda’s tax plans start at $49 and you have lifetime access to all reports after upgrading.

Crypto tax deadline in the UK

The deadline for reporting cryptocurrency taxes in the UK is the same as the deadline for your ordinary tax return. The financial year in the UK is from The 6th of April to the 5th of April the following year.

If you file your tax return electronically, the deadline is midnight on January 31 the following year. Paper returns are due by midnight on October 31 of the same year. This means that if you are filing taxes for the 2021/2022 tax year (April 6, 2021 – April 5, 2022), the deadline is either October 31, 2022 (paper returns) or January 31, 2023 (electronic returns).

Your tax bill also needs to be paid by the deadline. If you file your tax return late, miss the deadline for payment, or file an incomplete tax return, you might have to pay a penalty.

Which records do I need to keep?

As outlined in the Cryptoassets Manual, crypto exchanges might only keep your records for a certain time period, or the exchange might even cease to exist making it very difficult or impossible to get a copy of your trade history in the future.

For these reasons, it’s important to keep records of all your transactions at all times. HMRC says that it is the taxpayer’s responsibility for practicing record-keeping which should include the following details:

  • The type of cryptocurrency
  • Date of the transaction
  • If the coins were bought or sold
  • Number of coins/tokens involved
  • Value of the transaction in GBP
  • The cumulative total of the investment units held
  • Bank statements and wallet addresses (if needed for audit purposes)

Coinpanda’s tax product can create a capital gains report with all of this information for you.

How to report crypto taxes to HMRC

When you have calculated all your gains and losses during the financial year and identified all transactions that attract either Capital Gains Tax or Income Tax, you have the option to file your taxes either online or with paper forms.

Online Self Assessment

Your crypto taxes should be reported as part of your Self Assessment. In essence, this is what you must report:

  • Capital gains from cryptocurrency: SA100 and Capital Gains Summary SA108
  • Cryptocurrency income: Box 17 of your Self Assessment Tax Return (SA100)

To file your taxes online, you need to log in to the Government Gateway website.

Report taxes using paper forms

If you instead prefer to report your taxes using paper forms, you can download the tax return forms here. As already mentioned, it’s important to be aware that the deadline is October 31st, 2022 if you report your taxes using paper forms instead of online.

How to pay taxes on crypto in the UK

The deadline for paying your taxes is the same as the deadline for filing taxes in the UK. This means that the deadline for paying taxes is January 31st, 2023 for the 2021/2022 tax year.

How much you must actually pay in taxes will be shown after you have completed the Self Assessment. Since the payment deadline is the same as the tax return deadline, we highly recommend doing your crypto taxes before this date to avoid any big surprises right before the taxes must be paid.

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