Warning for cryptoasset investors
Changes to the self-assessment tax return signal HMRC’s intention to go after those buying and selling cryptoassets. What’s the full story?
HMRC has already set out its design for self-assessment tax returns for 2024/25. The return will include dedicated questions in the capital gains pages (Form SA108) for purchases and sales of cryptoassets such as Bitcoin and Ethereum. It’s apparent HMRC considers that many taxpayers are not reporting or incorrectly reporting gains or losses they’ve made from investing in cryptoassets. YouGov statistics show that in January 2024 10% of the adult population has bought or own them. This has been the position since mid-2022. Of course, this doesn’t mean they’ve all made gains that ought to have been declared to HMRC, but it believes that there’s a lack of awareness of when a declaration is required.
Another factor makes undeclaration increasingly likely. In the space of a year the annual exempt amount for capital gains has been reduced from £12,300 (as it stood on 5 April 2023) to where it stands now at just £3,000. This means that if the aggregate of all your capital gains, net of any capital losses, made in 2024/25 exceeds £3,000, you will have to pay capital gains tax (CGT) on the excess at 10% if you’re a basic rate taxpayer, or 20% if you pay at the higher or additional rate.
As well as understanding what and how to report, it’s essential that you keep a record of each cryptoasset transaction, i.e. the date, its value in UK sterling and any dealing or brokers’ costs (these are CGT deductible). Keeping good contemporaneous records will make your life much easier in deciding if you need to include a declaration to HMRC and whether you have CGT to pay.
Related Topics
-
Should you use simplified expenses?
The flat rate expense you can claim for business journeys if you’re self-employed has increased to 55p per mile. Can you use simplified expenses for motoring costs and is it more tax efficient to do so?
-
Topping up your spouse’s pension
Company pension contributions are highly tax efficient. As you’ve maxed out your contributions you want to begin adding to your spouse’s pension pot. Can your company make the contributions or do you need to pay out of your own pocket?
-
Electronic VAT return and payment due