Crypto Taxes in the UK: The Basics

Crypto is taxed at a capital gains and income tax level in the UK, depending on the type of transaction. Let’s cover the differences:

5. Gifting digital assets to your spouse or civil partner

Gifting cryptocurrencies to your spouse or civil partner can lead to saving on your crypto taxes. The Fair Market Value (in GBP) of the gift will be taken by your spouse/civil partner, meaning that both of you can use your individual tax-free allowance instead of just one allowance.

6. Time your gains

Timing the moment you realise your gains can save you on taxes if there are fluctuations in your yearly income. If you realise gains in a year when you have a lower income, you can enjoy a lower capital gains tax since that rate is dependent on whether your combined income and gains exceed £50,270.

7. Keep accurate records of your activity

If you have a reduction in taxes from employing legal strategies, you should pay even more attention to your records. You should always be able to keep proof of your transactions and tax calculations, including other information (e.g., date of acquisitions, date of sales, sales proceeds, Fair Market Values, gains/losses) that could be presented to tax authorities (e.g., HMRC).

8. Use crypto tax software and talk to a professional

The best way to spot potential ways to save on your crypto taxes is to properly track your holdings with a crypto tax software that enables you to track gains/income from all types of taxable transactions, from disposals to donations.

Besides using crypto tax software, working with a top crypto tax professional in the UK can help you plan ahead to optimise your crypto taxes even more.

Optimize & file your crypto taxes with CoinTracking

With the use of CoinTracking, you can properly track all of your crypto holdings and identify the opportunities in your portfolio to save on crypto taxes.

With CoinTracking, you can import all of your crypto trades and determine the gains/losses from all of your crypto trading/disposing (including spending crypto for purchases or donating crypto).

Besides tracking gains, CoinTracking can help you determine the income from all your crypto activities (e.g., airdrops, hard forks, staking, crypto mining), which can get complicated once you receive different batches of coins, given the difficulty of tracking their FMVs.

Finally, you can optimise your crypto taxes by tracking all of your trades and then generating the right tax forms to file your crypto taxes.

How to reduce YOUR UK crypto taxes in CoinTracking

You can only plan crypto tax saving strategies if you are 100% on top of your holdings and know the potential ways to save on your crypto taxes ahead of time. You can do so with CoinTracking by tracking losses and determining whether you should recognise them or by tracking donations to later deduct from your gains.

Crypto tax: Evasion vs Avoidance – what’s the difference?

Is it possible to hide cryptocurrencies from HMRC?

You can try to hide cryptocurrencies from tax authorities, but most of them, including the IRS (US) and the HMRC (UK), have the technological and legal resources to discover crypto holdings from taxpayers and discover if they have unreported or misreported crypto taxes. For example, the HMRC requests details of individuals with crypto transactions from exchanges on an annual basis, so if you use these it is likely HMRC may be aware of your transactions.

Failing to comply with rules can lead to penalties and fines over unpaid crypto taxes or harsher consequences if that pertains in time.

How to avoid & reduce crypto taxes in other countries

United States

In the US, you can lower your crypto taxes by realising losses (e.g., tax loss harvesting), putting crypto in retirement accounts (e.g., IRAs), holding crypto for over 12 months before selling it, and donating crypto, among other measures. Discover more strategies in our US crypto tax guide.

Canada

In Canada, you can lower your crypto taxes by realising losses to reduce your capital gains or deducting crypto donations, among other strategies. Read more about it in our Canada crypto tax guide.

Australia

In Australia, one of the main ways to reduce your crypto taxes is to hold your cryptocurrencies for over 12 months before selling and getting a 50% discount on your capital gains taxes over those profits. Discover how to claim that benefit in our Australia crypto tax guide.

Germany

The best crypto tax saving strategy in Germany is to hold cryptocurrencies for over 12 months before selling and enjoying tax-free gains. Read more in our German crypto tax guide.