91探花

Following the US presidential election result, the price of Bitcoin has soared from around $67,000 on 4 November 2024 to a high of over $89,000 a week later on 11 November 2024. Whilst a cut in interest rates across both sides of the Atlantic may have played a factor, the return of president-elect Trump to the White House is likely to be the key driver given he is expected to be more pro-crypto than his counterpart Ms Harris. Mr Trump is such a fan he was recently said to have and many commentators are anticipating that the US may now take a more permissive and relaxed approach to crypto regulation in the future. 

The latest estimated figures from the suggest that 9% of adults in the UK, approximately 4.97m people, owned cryptoassets in August 2022. The figures were 4% and 2.3m in 2021. Whilst the crypto market in the UK has grown, so too has the tax complexity. Changes to capital gains tax (CGT) rules in the recent Autumn Budget, together with other changes in recent years, mean that many more taxpayers may find themselves with higher tax bills and a requirement to submit a tax return. Here are three top tips to ensure crypto investors are not tripped up by tax:

Get to grips with the crypto admin early

Those new to the crypto market may get carried away, undertaking lots of trades or perhaps even using a trading bot to assist them. That can leave quite an extensive paper trail to pick up later and it is sensible to keep records as you go along. It will be necessary to keep appropriate records to support the entries on tax returns.

Consider using crypto tax software

HMRC does not have the software to help taxpayers calculate their crypto tax liabilities and personal attempts to calculate these can quickly lead to frustration due to the time and difficulty involved. There are a number of crypto tax software platforms that can assist with the exercise, although these are not infallible. Given the complexity of crypto taxation, HMRC expects taxpayers to take appropriate advice. Failure to do so could prove to be costly with penalties.

Utilise the available tax allowances

Unlike some investments, cryptoassets do not benefit from special tax reliefs and cannot be held in an individual savings account (ISA). The CGT annual exemption of £3,000 is much lower than it was in the last crypto bull run in 2021, and capital gains made on or after 30 October 2024 will now be taxed at 18% if the individual is a basic rate taxpayer or 24% if not. Those who are married or in a civil partnership may want to consider whether investments should be split between them to maximise the allowances available. Similarly, if any capital losses have been made in the past, these could be more valuable now with the higher CGT rates so check whether these have all been claimed.

With new regulations on the way that will make it easier for HMRC to receive data on crypto and an interest rate on late tax payments of 4% above the Bank of England base rate, taxpayers cannot simply stick their heads in the sand. They should plan ahead and make sure they engage early with their responsibilities to report any crypto gains or profits.