Introduction
With HMRC increasing its focus on cryptocurrency taxation, compliance is more crucial than ever. Filing crypto taxes may seem complicated, but understanding the process can help you meet your obligations efficiently and avoid penalties.
This guide explains how to file your crypto taxes in the UK, including when you need to file a Self Assessment, how to calculate your taxable gains and income, and the steps for completing your tax return accurately.
Step-by-Step Guide to Filing Crypto Taxes in the UK
Step 1 - Check If You Need to File a Tax Return
You may need to file a Self Assessment Tax Return if any of the following apply:
- Your capital gains exceed the CGT annual exemption, which is three thousand pounds for the tax year 2024/25 and six thousand pounds for the tax year 2023/24.
- Your total disposal proceeds exceed fifty thousand pounds, even if you are below the exemption threshold.
- Your crypto income exceeds the trading and miscellaneous income allowance of one thousand pounds.
If any of these apply, you must register for Self Assessment and file a tax return. If unsure, consulting a tax professional is recommended.
Is Crypto Taxable in the UK?
HMRC considers cryptocurrency taxable under two categories:
- Capital Gains Tax applies when you sell, trade, or dispose of crypto.
- Income Tax applies to crypto earned through staking, mining, airdrops, and employment compensation.
Accurately tracking your gains, losses, and crypto income is essential for filing your tax return correctly.
Step 2 - Registering for Self Assessment
If you are filing a tax return for the first time, you must register with HMRC by the fifth of October following the tax year you need to report.
- If you are not self-employed, register online using form SA1.
- If you are self-employed, register via your business tax account and add Self Assessment.
Once registered, you will receive your Unique Taxpayer Reference within ten days or twenty-one days if abroad, along with a Government Gateway Activation Code to access the online tax filing system.
If you have previously filed a Self Assessment, you do not need to register again. Simply log in and submit your return before the thirty-first of January deadline.
Step 3 - Filing and Paying Your Crypto Taxes
Once registered, follow these steps to file your crypto tax return correctly.
Reporting Capital Gains from Crypto
Capital gains and losses are reported on form SA108, which is included in your tax return.
When reporting crypto transactions for the tax year 2024/25, you will need to fill out the following sections:
- Box fourteen for the number of disposals
- Box fifteen for disposal proceeds, which is the total amount received from sales or swaps
- Box sixteen for allowable costs, which is the cost of acquiring the disposed assets
- Box seventeen for gains before deducting losses
- Box nineteen for losses in the tax year
If total disposal proceeds exceed fifty thousand pounds, you must declare your capital gains, even if they are below the exemption threshold.
Reporting Capital Losses from Crypto
Losses must be declared within four years to be used for offsetting future gains. Losses carried forward should be recorded in box forty-five of form SA108.
Reporting Crypto Income to HMRC
Crypto-related income is reported in form SA100 under the Other Income section.
- Box seventeen is for net crypto income after allowable expenses
- Box eighteen is for total allowable expenses
- Box twenty-one is for a description of the income
Crypto Received as Employment Income
If paid in crypto, the GBP value at receipt is subject to income tax and national insurance. Readily convertible assets such as Bitcoin may require PAYE deductions by the employer. Employees working for overseas companies may need to self-report income.
If unsure about crypto received as salary, consulting a crypto tax professional is recommended.
Step 4 - Paying Your Crypto Taxes to HMRC
Taxes must be paid by the thirty-first of January following the tax year.
Accepted Payment Methods
- Bank transfer through online or telephone banking
- Debit or credit card online payment
- Direct debit, which takes three to five working days
- Cheque, which takes three to five working days
If you cannot pay your taxes in full, HMRC may allow you to set up a payment plan for installment payments.
Common Crypto Tax Filing Mistakes to Avoid
- Failing to report all crypto transactions, including crypto-to-crypto trades, staking rewards, and airdrops
- Miscalculating cost basis by not applying HMRC’s same-day and thirty-day matching rules correctly
- Failing to declare losses, as unreported losses cannot be used to offset future gains
- Missing tax deadlines, which result in penalties and interest charges
- Not reporting transactions on foreign exchanges, as all worldwide crypto transactions must be declared to HMRC
Conclusion
Filing crypto taxes with HMRC requires accurate reporting of capital gains, income, and losses. Staying compliant helps avoid penalties and ensures that tax obligations are met efficiently.
Block3 Finance provides expert guidance in crypto tax compliance, helping investors file their taxes accurately and optimize their tax strategies under UK regulations.
If you have any questions or require further assistance, our team at Block3 Finance can help you.
Please contact us by email at inquiry@block3finance.com or by phone at 1-877-804-1888 to schedule a FREE initial consultation appointment.
You may also visit our website (www.block3finance.com) to learn more about the range of crypto services we offer to startups, DAOs, and established businesses.