Crypto tax UK ?

[JamesDaniel90]

First started investing in crypto 4 months ago but have not really thought about the tax I will have to pay when I withdraw profits.

I have £4k now invested overall and plan on holding until I at least 10x my money in the next bull run.

The majority of my holdings are in Coinbase, two in FTX & I have my CRO on crypto.com.

Being from UK , how much are we taxed when we cash out our profits and how do we go about paying this tax?

[jackg]

You can file the tax by registering for an account in the year that you realise the gain (sell the crypto for profits) you don't have to rush into this though or worry about it much until you have to pay it. You can search us "self assessment tax registration" to find out what you'll have to do.

You'll be taxed about 10-20% on the profits you make and those should be easy to calculate if you can download your history from coinbase, ftx and crypto.com easy enough.

[JamesDaniel90]

Hi ,

You say 10-20 % , that is quite a range what does it depend on?
Hopefully it is closer to 10%  


Anyone else know any more on this topic?

I think 20% is pretty steep myself didn’t expect that much.

[Don Pedro Dinero]

Anyone else know any more on this topic?

I think 20% is pretty steep myself didn’t expect that much.

I guess you don't have much investment experience, then. I find 10% low, but I would say that 15/20% capital gains tax is more or less in line with the general trend in industrialised countries.

Anyway, you won't be able to escape if you bought on Coinbase, and it shouldn't be too bad for you.

If you bought 1,000£ and you want to hold out for 10x, in the worst case scenario you will be taxed 20% of 9,000£, so you will have a net gain of 7,200£, having at the end of it all 8,200£.

[FERDYs]

Hi ,

You say 10-20 % , that is quite a range what does it depend on?
Hopefully it is closer to 10%  

It depends on your taxable income for the year.

10% basic rate will be charged if your income band is up to £50,270
20% higher rate will be charge if your income band is £50,271 and above

You won't be taxed if your income is equal to or lower than the tax allowance which is currently £12,300.

Some of the amounts and rates I mentioned could be wrong or could be different in the coming years. Make sure you stay up to date and maybe consult an accountant for more accurate tax filing.

[Mbitr]

This thread might be of help too 

https://bitcointalk.org/index.php?topic=5403973.0

[JamesDaniel90]

Anyone else know any more on this topic?

I think 20% is pretty steep myself didn’t expect that much.

I guess you don't have much investment experience, then. I find 10% low, but I would say that 15/20% capital gains tax is more or less in line with the general trend in industrialised countries.

Anyway, you won't be able to escape if you bought on Coinbase, and it shouldn't be too bad for you.

If you bought 1,000£ and you want to hold out for 10x, in the worst case scenario you will be taxed 20% of 9,000£, so you will have a net gain of 7,200£, having at the end of it all 8,200£.

No experience at all this is my first time investing into something.

20% just seems pretty high but then again I am not surprised!

Hi ,

You say 10-20 % , that is quite a range what does it depend on?
Hopefully it is closer to 10%  

It depends on your taxable income for the year.

10% basic rate will be charged if your income band is up to £50,270
20% higher rate will be charge if your income band is £50,271 and above

You won't be taxed if your income is equal to or lower than the tax allowance which is currently £12,300.

Some of the amounts and rates I mentioned could be wrong or could be different in the coming years. Make sure you stay up to date and maybe consult an accountant for more accurate tax filing.

So if i was to make £40,000 profit (below £50,270) I would only pay 10% tax but if i was to make £60,000 profit (above £50,271) I would pay 20%?

Do I have that right?

[Mbitr]

Hi ,

You say 10-20 % , that is quite a range what does it depend on?
Hopefully it is closer to 10%  

It depends on your taxable income for the year.

10% basic rate will be charged if your income band is up to £50,270
20% higher rate will be charge if your income band is £50,271 and above

You won't be taxed if your income is equal to or lower than the tax allowance which is currently £12,300.

Some of the amounts and rates I mentioned could be wrong or could be different in the coming years. Make sure you stay up to date and maybe consult an accountant for more accurate tax filing.

So if i was to make £40,000 profit (below £50,270) I would only pay 10% tax but if i was to make £60,000 profit (above £50,271) I would pay 20%?

Do I have that right?

Not quite - it’s a bit more complicated than that!
The Capital Gains will be taxed at the lower rate (10%) then whatever is over £50,270 will get taxed at 20%.
BUT, if you have any other income this will be taxed/accounted for first and then any Capital Gains - makes sense ??

[JamesDaniel90]

Hi ,

You say 10-20 % , that is quite a range what does it depend on?
Hopefully it is closer to 10%  

It depends on your taxable income for the year.

10% basic rate will be charged if your income band is up to £50,270
20% higher rate will be charge if your income band is £50,271 and above

You won't be taxed if your income is equal to or lower than the tax allowance which is currently £12,300.

Some of the amounts and rates I mentioned could be wrong or could be different in the coming years. Make sure you stay up to date and maybe consult an accountant for more accurate tax filing.

So if i was to make £40,000 profit (below £50,270) I would only pay 10% tax but if i was to make £60,000 profit (above £50,271) I would pay 20%?

Do I have that right?

Not quite - it’s a bit more complicated than that!
The Capital Gains will be taxed at the lower rate (10%) then whatever is over £50,270 will get taxed at 20%.
BUT, if you have any other income this will be taxed/accounted for first and then any Capital Gains - makes sense ??

Not quite but I will research more into it thanks!

I don’t expect to be in any profit for a while yet will just keep accumulating at these discount prices for now 

[FERDYs]

Hi ,

You say 10-20 % , that is quite a range what does it depend on?
Hopefully it is closer to 10% 

It depends on your taxable income for the year.

10% basic rate will be charged if your income band is up to £50,270
20% higher rate will be charge if your income band is £50,271 and above

You won't be taxed if your income is equal to or lower than the tax allowance which is currently £12,300.

Some of the amounts and rates I mentioned could be wrong or could be different in the coming years. Make sure you stay up to date and maybe consult an accountant for more accurate tax filing.

So if i was to make £40,000 profit (below £50,270) I would only pay 10% tax but if i was to make £60,000 profit (above £50,271) I would pay 20%?

Do I have that right?

It's difficult to explain but I'll try to make it simple using some assumptions.

Let me first correct my previous answer. It's not just based on the your taxable income for the year but also on the taxable gains you made from selling other assets.

taxable income comes from your salaries less deductions
taxable gains comes from profit selling cryptocurrencies less deductions

Aside from crypto investing, let's assume you also have a job and your taxable income is £30,000.

Using your first example of selling at a £40,000 profit. That will be your taxable gains assuming you have no deductible losses.

To determine what income band you belong, taxable income + taxable gains - capital gains allowance
£30,000 + £40,000 - £12,300 = £57,700. This is above £50,270 which means the rate applicable to your capital gains is 20%.

Capital Gains Tax:
£40,000 - £12,300 = £27,700
£27,700 * 20% = £5,540

Once again, I suggest that you consult an accountant. Taxation can be complicated and you could miss other details that affects the computation. Even my example could be inaccurate.

[JamesDaniel90]

Hi ,

You say 10-20 % , that is quite a range what does it depend on?
Hopefully it is closer to 10% 

It depends on your taxable income for the year.

10% basic rate will be charged if your income band is up to £50,270
20% higher rate will be charge if your income band is £50,271 and above

You won't be taxed if your income is equal to or lower than the tax allowance which is currently £12,300.

Some of the amounts and rates I mentioned could be wrong or could be different in the coming years. Make sure you stay up to date and maybe consult an accountant for more accurate tax filing.

So if i was to make £40,000 profit (below £50,270) I would only pay 10% tax but if i was to make £60,000 profit (above £50,271) I would pay 20%?

Do I have that right?

It's difficult to explain but I'll try to make it simple using some assumptions.

Let me first correct my previous answer. It's not just based on the your taxable income for the year but also on the taxable gains you made from selling other assets.

taxable income comes from your salaries less deductions
taxable gains comes from profit selling cryptocurrencies less deductions

Aside from crypto investing, let's assume you also have a job and your taxable income is £30,000.

Using your first example of selling at a £40,000 profit. That will be your taxable gains assuming you have no deductible losses.

To determine what income band you belong, taxable income + taxable gains - capital gains allowance
£30,000 + £40,000 - £12,300 = £57,700. This is above £50,270 which means the rate applicable to your capital gains is 20%.

Capital Gains Tax:
£40,000 - £12,300 = £27,700
£27,700 * 20% = £5,540

Once again, I suggest that you consult an accountant. Taxation can be complicated and you could miss other details that affects the computation. Even my example could be inaccurate.

My salary is £30,500.

If I was to cash out £50,000 profit for example , what would the total tax be I have to pay?

(If too confusing or long don't worry about it)

[Welsh]

Being from UK , how much are we taxed when we cash out our profits and how do we go about paying this tax?

Capital gains if you've generated money from what you've earned. So, it'll be something like profit - investment = x, then they take a percentage off that profit. So, I think its 20%, don't quote me on that as I haven't looked it up.

Obviously, goes without saying, this isn't financial advise, but generally that's how its done. Income is taxed different, well it's still 20% or whatever the changes were recently with the tax. I haven't sat down yet, and looked at it. I've just sent my records off to my accountant, but will wait until I get the documents back to actually break it down.

My advise is either look up on the government website, HMRC, and do a self assessment once you've understood everything or pay an accountant 100-200 to do it for yourself, and have piece of mind.

Here's a good website: https://listentotaxman.com/ again not to be relied on, but can give you a idea of the breakdown. Although, isn't as useful for capital gains tax, mainly income tax.

My salary is £30,500.

If I was to cash out £50,000 profit for example , what would the total tax be I have to pay?

(If too confusing or long don't worry about it)

You're in the first tax bracket with that wage, i.e not the 40% or 50%. It increases above 51k off the top of my head. Again, ballpark figures, check these for yourself, but it's around that amount, not exact. If you had £50,000 profit on top of your salary, you'd be reaching into the higher tax bracket, and therefore would be paying more tax on anything over that threshold.

£30,000 + £40,000 - £12,300 = £57,700. This is above £50,270 which means the rate applicable to your capital gains is 20%.

Capital Gains Tax:
£40,000 - £12,300 = £27,700
£27,700 * 20% = £5,540

Once again, I suggest that you consult an accountant. Taxation can be complicated and you could miss other details that affects the computation. Even my example could be inaccurate.

I do believe you can take away to initial investment, so £4,000 in the example provided. Since, you only get taxed on profit, so worth putting that into the calculations. Although, again not 100% on that, since I let my accountant do all the number crunching, as I find it easier, and just more peace of mind.

[JamesDaniel90]

Have just been thinking, when I am really to sell my crypto for GBP do I withdraw the funds to my bank and then sort out the tax or is the money taxed before you withdraw the funds to your bank?

If it is up to us to sort the tax out after withdrawing the funds to our bank, how does this work?

[JamesDaniel90]

Anyone?

I think we will be having another crash in the market soon and I want to try trading for the first time when the prices fall again.

For example Polygon, if you had bought at 26p just 4 weeks ago you would be 150% up right now, sounds too easy but it makes sense when the price falls this low to get involved.

Thinking of putting some money on something like Polygon when it does full again and wondering how the tax works if I double my money for example and withdraw my profits?

[FERDYs]

Have just been thinking, when I am really to sell my crypto for GBP do I withdraw the funds to my bank and then sort out the tax or is the money taxed before you withdraw the funds to your bank?

If it is up to us to sort the tax out after withdrawing the funds to our bank, how does this work?

The moment you sold for GBP.

If you don't plan on getting an accountant, you should study on your own and not just ask questions or hope that we'll spoon-feed you. Tax is tough if this is your first time but you're lucky to have all the resources you needed online. Spend time to read or watch them.



Welsh - yes you get taxed on profits or gains. The words used by James was also £40,000 profit and I assumed that the amount was already the net of his initial investment. Perhaps it's a confusion of using the word profit instead of sales revenue.

In basic accounting, sales revenue - cost of investment = profit

[JamesDaniel90]

Have just been thinking, when I am really to sell my crypto for GBP do I withdraw the funds to my bank and then sort out the tax or is the money taxed before you withdraw the funds to your bank?

If it is up to us to sort the tax out after withdrawing the funds to our bank, how does this work?

The moment you sold for GBP.

If you don't plan on getting an accountant, you should study on your own and not just ask questions or hope that we'll spoon-feed you. Tax is tough if this is your first time but you're lucky to have all the resources you needed online. Spend time to read or watch them.



Welsh - yes you get taxed on profits or gains. The words used by James was also £40,000 profit and I assumed that the amount was already the net of his initial investment. Perhaps it's a confusion of using the word profit instead of sales revenue.

In basic accounting, sales revenue - cost of investment = profit

I will study, but these forums are here for help also so if anyone could just explain how it works I don't see the problem in asking.