On a disposal any gains made are within the scope of capital gains tax at 10% or 20% (subject to a tax free annual allowance of £12,300).
However, in the rare circumstance where an individual buys and sells exchange tokens with such frequency, level of organisation and sophistication that the activity is considered to be trading then income tax will take priority over capital gains tax and will apply to profits.
Individuals will also be liable to pay Income Tax and National Insurance contributions on cryptoassets which they receive from their employer as a form of non-cash payment. There has been much talk recently of the government raising taxes to pay for the coronavirus pandemic. The recent announcement of an increase in National Insurance will not make a difference for most crypto investors.
However, for a long time now it has been suggested that capital gains tax rates should increase so that they are more in line with income tax rates. The government has so far held off making this change but if this did happen then this would have an impact on crypto investors with any gains they make potentially being taxed at higher rates than currently.”
How can we help?
Gherson can help with a wide range of tax and estate planning matters. We also have extensive experience of working with HMRC and dealing with HMRC investigations. Please do not hesitate to contact us or send us an e-mail.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
©Gherson 2021