{"id":21585,"date":"2021-12-09T11:30:48","date_gmt":"2021-12-09T11:30:48","guid":{"rendered":"https:\/\/smh.group\/?p=21585"},"modified":"2023-02-15T13:43:06","modified_gmt":"2023-02-15T13:43:06","slug":"cryptoassets-tax-confusion","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/cryptoassets-tax-confusion\/","title":{"rendered":"Tips to understand your confusing cryptoasset tax bill"},"content":{"rendered":"<p><strong><span data-preserver-spaces=\"true\">HMRC is sending letters to taxpayers who they believe hold crypto assets, advising them of the potential capital gains tax (CGT) implications and linking to relevant guidance. Many taxpayers will be unaware that simply exchanging one type of token for another is a disposal for CGT purposes.<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">They estimate that more than two million people in the UK hold crypto assets. Although certain transactions will be taxed as income, most are subject to\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/devstagesite.co.uk\/smhgroup\/chartered-accountants\/taxation\/capital-gains-tax\/\" target=\"_blank\" rel=\"noopener\"><strong><span data-preserver-spaces=\"true\">CGT<\/span><\/strong><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">HMRC is particularly concerned that people wrongly believe their crypto transactions to be tax-free. The buying and selling of crypto assets is not considered to be the same as gambling.<\/span><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">What is a disposal?\u00a0<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">There is a CGT disposal if you:<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Sell tokens (even if the proceeds are not withdrawn from the exchange);<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Exchange one type of token for a different kind of token;<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Use tokens to pay for goods or services; or<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Make a gift of your tokens to another person (unless it&#8217;s to your spouse or civil partner).<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">There is no disposal if, for example, you simply move tokens between different wallets.<\/span><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">CGT treatment<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">For CGT purposes, tokens are treated similarly to shares, so each type of token is pooled.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If tokens are exchanged, an appropriate exchange rate must be established in order to convert the transaction to pound sterling. With more than a few transactions, things can quickly become complicated. Software is available to help work out your tax bill.<\/span><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">Example<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">An investor purchases a new token using some of their Ether tokens. The new token increases in value, so the investor converts the new token back to Ether. Both transactions are disposals, so CGT will be due if the \u00a312,300 annual exemption is exceeded. There may be no funds to pay this bill, but any further sale of Ether to realise cash will be another disposal, meaning more tax.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The guidance highlighted in HMRC&#8217;s letters, which was set out three years ago, can be found\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.gov.uk\/guidance\/check-if-you-need-to-pay-tax-when-you-sell-cryptoassets\" target=\"_blank\" rel=\"noopener\"><strong><span data-preserver-spaces=\"true\">here<\/span><\/strong><\/a><span data-preserver-spaces=\"true\">.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If you are unsure of your tax position with crypto assets, don&#8217;t hesitate to get in touch with our team of\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/devstagesite.co.uk\/smhgroup\/chartered-accountants\/\" target=\"_blank\" rel=\"noopener\"><strong><span data-preserver-spaces=\"true\">Accounting &#038; Business Advisory<\/span><\/strong><\/a><span data-preserver-spaces=\"true\">\u00a0on\u00a0<\/span><strong><span data-preserver-spaces=\"true\">0114 266 4432<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0or\u00a0<\/span><a class=\"editor-rtfLink\" href=\"mailto:info@smhca.co.uk\" target=\"_blank\" rel=\"noopener\"><strong><span data-preserver-spaces=\"true\">info@smhca.co.uk<\/span><\/strong><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>HMRC is sending letters to taxpayers who they believe hold cryptoassets, advising them of the potential capital gains tax (CGT) implications and linking to relevant guidance. Many taxpayers will be unaware that simply exchanging one type of token for another is a disposal for CGT purposes.<\/p>\n","protected":false},"author":4,"featured_media":21661,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3],"tags":[69,294,83,869,868,11,19],"class_list":["post-21585","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","tag-capital-gains-tax","tag-cgt","tag-chartered-accountants","tag-crypto-currency","tag-cryptoassets","tag-hmrc","tag-tax"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Tips to understand your confusing cryptoasset tax bill - SMH Group Accounting &amp; Business Advisory<\/title>\n<meta name=\"description\" content=\"HMRC is sending letters to taxpayers who they believe hold cryptoassets, advising them of the potential capital gains tax (CGT) implications and linking to relevant guidance. 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