When you dispose of cryptoassets (the term HMRC prefers) such as bitcoin, you may need to pay capital gains tax if your gains take you above the annual exempt amount, currently £12,300. The tax year runs from 06 April to 05 April of the following year.
WHAT IS A DISPOSAL?
- Selling your tokens
- Exchanging your tokens for a different token even if left on the same exchange
- Using your tokens to pay for good and services
- Giving away your tokens as gifts unless it’s to your spouse or civil partner.
- Donating your tokens to charity
Gains are calculated after allowable costs are accounted for. These include the costs of:
- Transaction fees paid before the transaction is added to a blockchain
- Advertising for a buyer or seller
- Drawing up a contract for the transaction
- Making a valuation so you can work out your gain for that transaction
- A proportion of the pooled cost.
The following costs are not allowed:
- Any amount already deducted against profits for income tax.
- Mining costs eg for equipment and electricity.
MORE ABOUT POOLS
A pool is created for each type of token eg a bitcoin pool, ethereum pool, etc Every time tokens are bought or sold, the relevant pool(s) must be updated. When tokens are sold from a pool, an equivalent proportion of the pooled cost is used to calculate the gains. Records MUST be kept for each pool.
Tokens must not be placed into pools if bought:
- on the same day that you sell tokens of the same type;
- within 30 days of selling tokens of the same type.