1

In a scenario where I have invested £10k in an *asset class over 5 years, in this time I have done 1000s of transactions on different exchanges and bought and sold many different assets, a lot of which became worthless. For most of the 5 years, I have been at a loss. These assets are now worth £25k.

I would like to declare this profit on my tax return but it's almost an impossible task to work through all these transactions. How permissible is it to declare this in a digested way on my tax return, the most extreme being one transaction in which I made 15K?

  • the asset is cryptocurrency.
4
  • Have you sold the assets? If not, by my understanding, you don't need to declare them at all at this stage - only when you sell them. gov.uk/capital-gains-tax/work-out-need-to-pay (and even then, only if the total gains exceed the allowance or there is a single gain bigger than 4 times the allowance). – Vicky Jan 25 at 8:41
  • I have been buying and selling, between different cryptocurrencies, but I haven't sold them to GBP yet. But my understanding was tax has to be paid every time you buy and sell even if it is to another cryptocurrency? And that you have to declare it even if it is below the allowance? – Dogs Jan 25 at 8:55
  • Well, my advice is worth exactly what you paid for it, but I got my understanding about the thresholds etc from the link I pasted in my above comment - have a read yourself and see what you think. – Vicky Jan 25 at 9:49
  • There are many 100s if not 1000s of different cryptocurrencies, and I traded between them with realising the ramifications on tax, and I am asking advice to on how to proceed correctly. Why are you being sarcastic? – Dogs Jan 25 at 19:37
3

I've been looking into this some more and found some questions along the same lines (unfortunately without useful answers) on bitcoin.SE as well. However, I also found this publication from HMRC which is actually a very useful overview of tax treatment of cryptoassets.

The whole document is useful and relevant but I would particularly point you at the following section (my emphasis):

Individuals need to calculate their gain or loss when they dispose of their cryptoassets to find out whether they need to pay Capital Gains Tax. A ‘disposal’ is a broad concept and includes:

  • selling cryptoassets for money
  • exchanging cryptoassets for a different type of cryptoasset
  • using cryptoassets to pay for goods or services
  • giving away cryptoassets to another person

If cryptoassets are given away to another person who is not a spouse or civil partner, the individual must work out the pound sterling value of what has been given away. For Capital Gains Tax purposes the individual is treated as having received that amount of pound sterling even if they did not actually receive anything.

In other words - yes, you are liable for CGT (if your gains are above the threshold) and you will have to document every trade. If you genuinely don't have records to support each trade then I would call HMRC for advice about how to proceed. They are usually very helpful on their phone lines and will keep escalating you upwards until you find someone who can answer.

2
  • 1
    How to deal with missing records may be answered by gov.uk/capital-gains-tax/records - "If you do not have records". I guess the OP would need to come up with some estimate. – GS - Apologise to Monica Jan 25 at 21:07
  • I have complete records for this tax year where I made a profit, it's the previous 4 years where I actually made losses that is hard to piece together. So I can document within this tax year, but I would have to estimate the previous years. Is that ok? – Dogs Jan 26 at 8:08

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.