Self-Assessment Tax Returns for Crypto

Individuals who have acquired, sold, or traded cryptoassets may be liable for income tax or capital gains tax (CGT), which must be disclosed in a self-assessment tax return due by 31 January 2024.

Many individuals may not realise that they have a filing requirement due to holding cryptoassets, particularly when no money has been received. The exchange of one cryptoasset for another is recognised as a taxable event, potentially leading to a capital gain or loss.

HMRC urges individuals to assess their filing obligations for the 2022/23 tax year, reiterating that failing to submit a self-assessment tax return by January 31, 2024, may result in penalties and interest on unpaid taxes.

For the 2022/23 tax year, the annual exempt amount for capital gains is £12,300. If disposals throughout the year generate gains surpassing this threshold, it must be reported to HMRC, with the corresponding CGT paid. Additionally, if cumulative proceeds from disposals exceed £49,200 over the tax year, they must also be disclosed in a self-assessment tax return. Depending on the value and frequency of crypto transactions, individuals might unintentionally surpass these thresholds.

Cryptoassets received from an employer could be deemed as employment earnings, with income tax and possible national insurance contributions withheld through PAYE. Other income from cryptoassets, such as mining, might be treated as taxable income and subject to income tax.

HMRC provides guidance on cryptoasset taxation and a dedicated cryptoassets manual offering detailed interpretations of the rules. In instances where individuals have undisclosed tax liabilities from prior tax years, HMRC’s new disclosure facility for cryptoassets can be utilized.