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Crypto assets Tax for Individuals

What are Crypto assets ?

Crypto assets are referred as crypto currency. It can be transferred, stored or traded electronically.


What are Crypto Assets Types ?

Exchange Tokens

Exchange tokens are used as currency means of payment and are becoming very popular due to potential increases in the value. Bitcoin is example of exchange token

Utility Tokens

Utility token are used to get access to particular goods or services on a platform. A business will normally issue the tokens and commit to accepting the tokens as payment for the particular services or goods.

Security Tokens

Security tokens provides rights and interests in a business, for example ownership, repayment of specific sum of the money or entitlement in future profits.

Stable coins

Stable coins are prominent type of crypto assets. These types of assets have stable value.


How Crypto assets are taxed in UK ?

This is tricky question, HMRC do not have certain way of taxing crypto assets, They tax it dependent on nature of the token or how you use the token.

  • If Individuals help crypto assets for capital appreciation, they are taxed under capital gain tax

  • If Exchange token are used Corporation tax is payable for companies

  • Crypto assets received as employment income will be subject to income tax and national insurance on value of the asset


What are the exchange fees & can you deduct them as expenses ?

To own crypto assets or trade crypto assets, you have to create a account on online platform. These online platforms charge fees which is called exchange fee. Example of exchange fee are Deposit fees, trading fees, withdrawal fees.

Individuals may only be entitled to deduct only minority or even none of the exchange fees depends on type of fee incurred.


Individuals Capital Gaines Tax allowable & Disallowable expenses

  • Exchange (Swap) Sterling for a fiat currency is allowable cost

  • Exchange/Swap fiat currency other than sterling is allowable cost

  • Deposit sterling with an exchange is not a allowable expense for CGT

  • Deposit fiat currency with exchange is not allowable expense

  • Using sterling to purchase tokens are allowable cost

  • Using fiat currency to buy tokens is allowable cost

  • Dispose of tokens for sterling are allowable costs

  • Withdrawal fiat currency fee is disallowable cost


Does Crypto assets fall under inheritance Tax ?

Yes, HMRC take Crypto assets as property for the purpose of inheritance tax. The location of the assets may need to be determined for non UK domiciled Taxpayers


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