If you trade, buy, or sell crypto in the UK, then you will have to pay taxes. Not everyone who deals with this kind of digital asset understands that they have to pay crypto taxes, and this can get them in a lot of trouble with HRMC.
As with any other commodity investors deal with, from real estate to capital gains, you do have to pay taxes on cryptocurrency. This is not something many consider when getting into the world of crypto assets, and it is not something widely discussed online as the focus is usually on the profits that can come from this endeavor.
However, if you make crypto trading profits, you need to pay tax like any other income, which can reduce how much you take home at the end of the day.
In this guide, we are not only going to explain how and why you need to pay crypto taxes but also the ways that you can avoid these payments altogether. Learning how to avoid crypto taxes in the UK legally will allow you to take home more profit than ever before.
Do I Need To Pay Tax On Crypto In The UK?
There is no specific crypto tax that you will face when dealing with these kinds of assets in the UK, but you do still have to pay tax on crypto.
Your digital assets will be subject to two main kinds, which are income tax and capital gains tax, much like any other asset or commodity you can trade. In some cases, other taxes like National Insurance Contributions (NIC) may be considered if you get paid for work in cryptocurrency, but for the most part, this is an income tax and capital gains taxable event.
The kind and the amount that you will need to pay for crypto assets will vary based on the specific transactions you are making with crypto. For example, if you are seen to be making an income with crypto, with regular payments being made into your accounts, then you will have to pay income tax for these, but if you are seen to be selling, swapping, or trading to make gains through crypto, then capital gains tax will apply.
This was outlined in 2019 by Her Majesty's Revenue and Customs (HMRC) when specific guidance regarding crypto tax was given, and an official statement was released claiming that the trading of currencies like Bitcoin is a taxable event. (read more: https://coinpass.com/en/blog/academy/how-to-avoid-crypto-taxes-in-the-uk)…
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