Need to report your cryptocurrency gains on your self-assessment tax return in the United Kingdom? Here are a few steps you can take to ensure that you accurately report your tax liability to HM Revenue & Customs (HMRC).
Crypto Tax 2022: The Ultimate Guide II for Investors
1. Gather your transaction records
The first step in reporting your cryptocurrency gains on your self-assessment tax return is to gather your transaction records. This includes records of your cryptocurrency purchases, sales, and exchanges. You should also keep records of any fees or charges associated with your cryptocurrency transactions.
2. Determine your tax liability
Once you have gathered your transaction records, you must determine your tax liability based on your cryptocurrency gains. For income tax purposes, the amount is the market value of the cryptocurrency at the time it is received or disposed. Similarly, if you are self-employed and receive cryptocurrency as payment for goods or services, the value of the cryptocurrency will be treated as part of your trading profits and subject to income tax. Also, if you dispose of cryptocurrency for a profit, it may be subject to capital gains tax if it exceeds the annual exempt amount (currently £12,300 for the 2021/2022 tax year).
3. Report your gains on your self-assessment tax return
Once you have determined your tax liability, you must report your cryptocurrency gains on your self-assessment tax return. You should report your total cryptocurrency gains for the tax year in your tax return’s “Capital gains: other” section. If you have a net capital loss (i.e., your capital losses exceed your capital gains), you can claim the loss as a deduction on your tax return.
4. Keep records for future reference
It is essential to keep records of your cryptocurrency transactions for future reference. Good recordkeeping is always important, especially if the HMRC selects you for a tax review. You should keep records of your transaction records, tax calculations, and any other relevant documentation for at least five years after the end of the tax year.
Why You Should Consider Professional Tax Advice
Reporting your cryptocurrency gains on your self-assessment tax return in the UK can feel overwhelming. Remembering these steps, however, can put you on the path to being a pro:
- gather your transaction records
- determine your tax liability
- report your gains
- keep records for future reference.
Easy right? Unfortunately, this is easier than done due to the nature of cryptocurrency and the shifting regulatory landscape in the UK. For example, the UK has updated its cryptocurrency tax policy ten times in the last three years! For this reason (and many others), I recommend seeking professional advice to balance your books so you can focus on growing your business and enjoying the fruits of your labour. Scroll down to learn more!
Modern Problems Require Modern Solutions
Are you ready to take your business to the next level but not quite ready for a monthly membership? No problem! We’ve got a solution for you. Introducing our one-time £99 Consulting Call.
This is your chance to get expert advice and guidance from our team of professionals, all for a low, one-time fee. During our Consulting Call, we’ll work with you to identify your business needs and provide personalized recommendations for success.
And the best part? Our Consulting Call is completely risk-free. There are no long-term contracts or hidden fees – just one simple, affordable fee to get you on the path to business success.
Don’t wait any longer to take control of your business’s future. Sign up for our Consulting Call today and let us help you achieve your goals. You won’t regret it!
Let’s follow our Instagram
