Koda Cryptocurrency – Should I Declare My Crypto Sales On My UK Tax Return?
The crypto investment team here at Koda Cryptocurrency are often asked if investors need to declare crypto coin sales on a UK tax return. It really depends on your personal circumstances. However, we have put some points to consider below for you. This will help you better understand how and if you need to declare your crypto sales on your UK tax return.
Generally speaking, if you are a tax resident in the UK and you make gains of over your Capital Gains Tax exemption then you will need to report and pay Capital Gains Tax via your UK self-assessment tax return.
However, if your crypto sales gains fall within the annual exemption of the Capital Gains Tax then you may still need to report the gains. This will be the case if the proceeds either exceed four times the annual exemption or where you have other capital gains or losses.
Further to changes in legislations, HMRC now receive information directly from UK cryptocurrency exchanges and platforms. If you do not disclose your cryptocurrency transactions it is likely that this will result in a HMRC enquiry. In turn, this could lead to HMRC imposing penalties which will end in it costing you more.
HMRC has reported that it has allocated resources to cryptocurrency to ensure the tax due on all cryptocurrency transactions are declared through collaboration with their international partners.
The Joint Chiefs of Global Tax Enforcement comprising of Canada, Australia, USA, the Netherlands and the UK, also know as the JS, are already sharing information. This information that they are sharing is on the use of crypto assets. They foresee more information being shared globally in the coming years as a coordinated effort to tackle tax crimes across the world.
This has resulted in an increasing number of HMRC enquiries that focus on those selling and buying crypto assets. This is why it is so important that you declare your crypto sales on your UK tax return. HMRC have the information, so it is likely you will get caught out if you try not to declare your crypto sales on your UK tax return.
Crypto transactions are a rapidly developing area of tax. If you’re unsure if your need to include your cryptocurrency profits and gains on your tax return you need to consider seeking professional advice. We will also recommend professional tax advice if you have undeclared historic profits or gains from previous crypto transactions.
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