Crypto Tax and Accounting: Taxation and Accounting Services

Is crypto taxable - YES!

How is crypto taxed?

There is no such thing as “crypto tax”, however, the absence of explicit tax laws for crypto does not mean that crypto is not taxed.

As with other assets, crypto is taxed based on how it is used, for example:  

  • If it is used for an investment purpose, then it is taxed to Capital Gains Tax, or Corporation Tax if a company. 
  • Where it is used as a means for remuneration, it is charged to Income Tax and National Insurance contributions. 
  • If it is used for a trading purpose to make profit, it is charged to Income Tax or Corporation Tax (as appropriate). 

This may sound simple, but the UK legislation is complex and the uniqueness of  cryptoassets creates a lot of uncertainty. Investors and traders can often find themselves confused as to how their individual activities should be taxed.

It is important to bear in mind that crypto is also considered to be property for Inheritance Tax purposes.

What is crucial to remember is that crypto is taxed depending on the actions and circumstances of the individual or business concerned.


When does a cryptoasset transaction become taxable?

Calculating tax liabilities is often far from simple, with the difficulty compounded in cases where you hold other assets which you plan to sell. 

But keeping it simple, here are the top three common errors made by crypto investors:

  1. “Crypto-to-crypto isn’t taxable.” It may seem that as crypto isn’t real, or a tangible asset, the selling of one crypto, say bitcoin, for another like Ether wouldn’t be taxable.  Wrong. Crypto-to-crypto transactions and any gains are taxable.  
  2. “Crypto is money and money is not taxable.” Wrong. Crypto is not the same as a pound in your pocket (or in the bank), meaning that when you use it to pay for something, that can also lead to a tax liability. 
  3. “I haven’t withdrawn any fiat from the exchange.” This does not matter and despite you not having withdrawn any fiat currency (such as pounds Sterling or the US Dollar), there can be tax to pay.  

Our team can help you accurately calculate the gain, prepare your tax return correctly, and assist with effective tax planning to optimise your return’s tax efficiency. 

How we can help you

We work with solicitors, developers, NFT platforms, custodians and exchanges who will help achieve your desired goals and remain on hand to support you throughout your journey. We will be with you every step of the way, solving your problems and giving proactive advice to optimise your business and its needs. 

Andersen provides a wide range of services including: 

  • tax advisory, 
  • financial advisory, 
  • valuation,
  • tax compliance,
  • accounting,
  • consulting services for individuals and commercial clients. 
  • and more…

Implementation and development of cryptoasset regulation is moving at a fast pace, not just in the UK, but globally.  We are experts in international structures and the differing regulatory requirements around the world and have a deep understanding how these global developments could affect your project.  

If it’s not on the list, but crypto and tax related, we probably do it.  If we don’t, thanks to our extensive network across the crypto sector, we can connect you to the right experts required to make your dreams a reality. Contact us with any questions.


Don’t put your head in the sand!

If you have concerns that you have unpaid tax or have received a letter from HMRC, we can help you bring your affairs up to date. 

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