Any form of currency that exists digitally or virtually and uses cryptography to secure transactions
If you have invested in crypto, then any gains or losses need to be reviewed for the tax consequences and declared accordingly to HMRC.
The main tax consequences are but are not limited to:
⚫ If you’ve sold your crypto for more than you bought it, you’ll likely pay capital gains tax on the profit.
⚫ If you lost money through trading, those losses could minimise your capital gains tax bill. It’s also important to remember that swapping cryptocurrencies will trigger a capital gains taxable event, because you will be selling crypto to other investors or liquidity pools.
⚫ If you’re trading huge amounts of crypto – or anything that will be considered ‘exceptional circumstances’ – HMRC will think you are a trader and ask you to pay income tax on trading, rather than capital gains taxes.
⚫ Crypto investors need to report gains on cryptocurrency on their annual self-assessment tax return – or they can use HMRC’s real-time capital gains tax reporting service to pay tax on crypto.