What taxes do I pay on crypto?
Trading, selling, or buying crypto in the UK may be a great way to make an additional income, but it is something you need to pay tax on. Not everyone who partakes in this work understands that they need to pay tax on cryptocurrency, and not paying this can get them into trouble.
As with any other asset or income you make in the UK, crypto is subject to tax. Two main kinds of tax apply to cryptocurrency in the UK depending on how much you earn, and these are income tax and capital gains tax. There are also circumstances where you may need to pay tax on crypto, but for most people earning crypto, it is considered a taxable income in these two main ways.
Whether you trade, buy or sell crypto like Bitcoin or Litecoin in the UK, you may be subject to tax obligations when you make a profit on these assets.
The HMRC has specific guidelines for cryptocurrency and the tax that may need to be paid on these assets, which we will discuss in this guide. We will also be sharing the different ways you may be taxed on your digital assets and where you stand when selling crypto in the UK.
Do I Have To Pay Crypto Taxes?
The short answer to this question is yes; you do have to pay crypto taxes in the UK whether you buy, sell, or trade cryptocurrency.
While cryptocurrency, along with any other digital assets currently in the market, is largely unregulated in the UK, it does still need to be claimed as an income in your self-assessment tax return at the end of the financial year. Her Majesty’s Revenue and Customs (HMRC) views Bitcoin and any other cryptocurrency in the same manner as any other asset you may deal with, like real estate or stocks and shares.
This means that buying and selling crypto for a profit makes your income susceptible to capital gains tax based on the profit you make. In some cases, you may also have to deal with income tax on cryptocurrency in the UK if you are seen to have a regular income from your digital assets or earn interest on these profits.
In 2019, HMRC released guidelines regarding UK crypto taxes and how they will affect digital earnings. This was the official listing of the tax liabilities that people working with crypto have to face, and it is a legal obligation to pay tax on crypto.
Like any other asset you can earn money from, crypto investments are considered to be a taxable event in the UK and therefore need to be claimed in your self-assessment tax return along with any other miscellaneous income you may earn. (read more)…
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