How to report cryptocurrency via Self Assessment

Have you invested in cryptocurrency? Millions have. YouGov research suggests that 12% of UK adults have invested in crypto and if you’re a relatively recent crypto investor, you may be wondering (or maybe even worrying) about your new crypto tax responsibilities.

When you dispose of crypto asset exchange tokens (more usually called cryptocurrency or just crypto), there can be Capital Gains Tax to pay. HMRC considers crypto to be an asset, not a currency. And “disposal” means selling your crypto assets, exchanging them for other crypto assets, using them to pay for goods or services, giving them away (unless it’s to your spouse or partner) or even donating them to charity.

Crypto and Capital Gains Tax

The “gain” is the difference between the amount you paid for the crypto and its value when disposed of. If you were gifted crypto, to work out your gain you must find out the market value when it came into your possession.

You only have to pay Capital Gains Tax on your total gains above your tax-free allowance (the “Annual Exempt Amount”), which is £3,000 a year or £1,500 for trusts (2024/25 tax year). You also get a tax-free Personal Allowance of £12,570 (2024/25 tax year).

• If you’re a higher or additional rate Income Tax payer (ie your taxable annual income is more than £50,270) you’ll pay 20% tax on your taxable crypto gains following disposal.
• If you’re a basic rate Income Tax payer (ie your taxable income is £12,571 to £50,270), you’ll pay 10% on your taxable crypto gains following disposal.

To check if Capital Gains Tax is payable, you must work out your gain for each of your transactions. No Capital Gains Tax is payable on the value of tokens upon which you’ve already paid Income Tax.

Need to know! If you’re trading large amounts of crypto, HMRC will see you as a professional crypto trader and you’ll be expected to pay Income Tax rather than Capital Gains Tax. If so, you’ll need to complete and file a Self Assessment tax return, plus SA103 supplementary page. Again, you’ll be taxed according to the Income Tax band into which your overall taxable income falls – 20% basic rate, 40% higher rate and 45% additional rate (2024/25 tax year, the Income Tax rates are different in Scotland). If you earn interest on your crypto, this can also be subject to Income Tax.  

Reporting and paying Capital Gains Tax on cryptocurrency

If you need to report and pay Capital Gains Tax you can either:

• complete a Self Assessment tax return following the end of the tax year on 5 April or
• use the Capital Gains Tax real time service to report your gain immediately after disposal (as long as you’re a UK resident and you’re reporting on behalf of yourself. If you’re already registered for Self Assessment, you’ll also need to include details of the sale in your Self Assessment tax return).

You’ll need to complete and file the main Self-Assessment tax return SA100 form and the Capital Gains Summary SA108 supplementary pages (detailing your crypto capital gains and/or losses). When completing a Self Assessment tax return for Capital Gains Tax or Income Tax, the crypto gain must be reported in pounds sterling.

Some of your crypto-related expenses may be deductible for Capital Gains Tax if allowable, including transaction fees paid before the transaction is added to a blockchain, advertising for a buyer or seller, drawing up a transaction contract, etc. Deductible allowable tax expenses can also include some of the pooled cost of your tokens when working out your gain.

Need to know! If you’re filing online (as most people do), to avoid a late-filing penalty, you must complete and file your Self Assessment tax return before midnight on 31 January following the end of the tax year on 5 April during which you earned gains or income from crypto.

Capital Gains Tax and crypto losses

You can report “allowable” losses on crypto to HMRC to reduce your total taxable gains and subsequent tax bill. When you report a loss, it is deducted from any other taxable gains you made in the same tax year.

If your total taxable gain remains above the tax-free allowance, you can deduct losses from previous tax years that you didn’t deduct. If they reduce your gain to the tax-free allowance, you can carry forward remaining losses to a future tax year.

Need to know! You claim for losses by including them in your SA108. If you’ve never made a gain and aren’t registered for Self Assessment, you can write to HMRC instead. You do not have to report losses straight away, you can claim them up to four years after the end of the tax year that you disposed of the asset.

What crypto records must you keep?

You must keep separate records for each transaction, detailing token type, disposal date, token disposed of, number of tokens left, token value in pounds, bank statements and wallet addresses, a record of the pooled costs before and after you disposed of them. HMRC will ask to see your crypto records if it decides to carry out a compliance check.

Need to know! As well as being a legal requirement, keeping detailed crypto records will save you lots of time and effort when completing tax returns.

Failure to report crypto to HMRC

HMRC has launched high profile campaigns to encourage people to come forward and disclose unpaid crypto tax. In 2024 it sent “nudge letters” to those it suspected of failing to pay the correct tax on their crypto gains.

Failure to report cryptocurrency gains to HMRC could result in having to pay unpaid tax, as well as interest and a penalty. Those guilty of deliberate tax evasion can face criminal charges. HMRC has the tools, know-how and the will to track crypto transactions, so trying to outsmart the UK tax authorities is highly risky. And if you’re worried about taxable crypto income or gains that you didn’t report previously but should have.

If you need to complete and file a Self Assessment tax return and SA108, because you have crypto gain to report, then GoSimpleTax makes the process far easier and quicker, with basic mistakes much less likely. Start your FREE trial today to find out why thousands of other people like you love GoSimpleTax.

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.