How Do I Pay Tax for Trading Cryptocurrency?

1. How Do I Pay Tax for Trading Cryptocurrency?

2. A wise man once said “nothing is inevitable except for death and taxes” and it is true that even in the cutting edge world of cryptocurrency tax remains inevitable and because the tax authorities are still undecided as to exactly what cryptocurrency actually is the tax regulations are tremendously complex. • That is why, if you are going to be sure your crypto tax affairs are in order you will need the help of an experienced crypto tax accountant. • If you are looking for a crypto tax accountant Luton is a good place to start looking. Our Luton based team can help you work out exactly what part of your crypto portfolio is subject to taxation and which tax regulations apply. • Currently there is no specific “cryptocurrency tax” in the UK. 

3. However, if the value of your cryptocurrency increases HMRC will see that as a capital gain subject to Capital Gains Tax at either 18% or 20% depending on your circumstances. If you are paid for goods or services in cryptocurrency the value of that payment would be subject to income tax at whatever rate applies to you.

4. Speak with your accountant in Luton who can help you make sure your tax return accurately reflects the income and capital gains you have made as a result of your crypto activity. ensuring that you are absolutely within all applicable United Kingdom tax regulations. • It is important to get this right, failure to comply with tax regulations can result in hefty fines. That said it also makes sense to work within the regulations to limit your tax liabilities. • This is much easier with the assistance of an experienced crypto tax accountant. The UK tax regulations do contain allowances which your Luton accountant can talk you through.

5. HMRC treats cryptocurrency as a capital asset not a currency. If you sell, trade or spend any crypto you must pay tax on any capital gain you have made. • Capital gains tax also applies if you gift your cryptocurrency to anybody other than your spouse or civil partner. There could also be tax liabilities if you use cryptocurrency in a Decentralised Finance or “DeFi” transaction. • Recent HMRC guidance suggests that DeFi transactions could attract either Income or Capital Gains tax dependending on “the nature of transaction”. • Given the level of ambiguity it is good to have an experienced crypto tax accountant on your side when working everything out.

6. Both our Luton accounting firms and our team of chartered accountants in Cambridge would be happy to help guide you through the crypto tax minefield. • Organising your crypto trading to take advantage of the available allowances while paying the right amount of the right kind of tax is complicated, but a familiar task for our chartered accountants in Cambridge who can use UK tax laws to help you to offset capital gains against capital losses. • Our team of chartered accountants in Cambridge can also advise you on the other circumstances where transactions involving cryptocurrency can be tax free. • If you purchase crypto currency using a fiat currency, move cryptocurrency between your different wallets or gift it to a registered charity or your spouse there is no tax. 

7. With the help of a good accountant you can manage your crypto assets in a tax efficient manner. • Taking advice from qualified accountants with experienced in cryptocurrency trading and taxation is important if you are going to pay the appropriate tax and satisfy all of the UK regulations without paying more than you should. • MMBA is ready to help with all of your crypto taxation affairs.

8. Thank You For More Information Visit: https://www.mmba.co.uk/