Taxation of Crypto Assets
An alternative investment
Cryptocurrencies are becoming increasingly popular as part of a wider investment strategy for individuals. Despite this, the tax implications of making such investments are not commonly known. HMRC released guidance in 2021 (having previously considered crypto akin to gambling). Given the changing landscape and HMRC's own guidance being updated regularly, it is important that you take professional advice from qualified and experienced tax advisers who are familiar with cryptocurrency.
Investing in crypto assets is high risk and you should ensure that you are familiar with the way in which crypto trading operates before embarking on your investment journey.
Crypto tax tracker
With a small portfolio, it is possible to monitor your transaction history. However, multi-platform portfolios with multiple crypto-crypto and crypto-fiat transactions are troublesome when it comes to assessing tax implications. We use a combination of systems developed in-house and third party platforms such as Koinly (there are other platforms available), to do some of the heavy lifting.
If you take a Koinly account through us, we can offer significantly discounted rates, and with a dedicated account manager at Koinly, we can help you to take the guesswork out of understanding your tax liability.
But it's just another currency...
In the eyes of HMRC, crypto assets are not currency or money, and any activity involving crypto can be considered to be gambling.
Many complexities need to be considered when reviewing your tax position. For example, there is a distinction between trading and investing – this is important, as HMRC can apply punitive tax rates on crypto transactions if you are considered to be trading.
- Generally, tax may be due when you:
- Receive cryptoassets from employment.
- Hold them as part of a trade.
- Are involved in crypto-related activities generating income.
- Sell or exchange cryptoassets.
- Use cryptoassets for purchases, gifting, or donations.
Whatever the situation, we have the expertise to help you to understand your tax obligations, provide proactive advice, and ultimately keep you on the right side of HMRC.
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Jennifer Muller
I have used [Phinch] services for many years. [The] team have guided me through the complicated processes of US taxes as an expat, and stayed on top of any changes in filing rules. Highly recommended.
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[The Phinch] team have been incredibly helpful in the preparation and filing of my US tax returns and FBAR submissions, even when I have been less than fully organised. The team are always prompt and professional. They stay abreast of changes in annual tax rulings and have helped me secure rebates or stimulus payments where these are due. I highly recommend this company.