Crypto taxes

I love technology but find crypto currencies and assets duller than football*. But it exists, and is taxed, so we need to know how and when.

A myth has built up that it somehow escapes tax or that HMRC cannot understand it.

At the time of writing (April 2021) many keen investors are showing enviable crypto gains. So perhaps we’ll see lots of selling at a profit (before the greater fool theory comes into play and we look at loss relief for those to who buy now?).

The latest HMRC manual update gives a good and fair summary of the position https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto20000

Any HMRC guidance comes with the warning that it may not reflect the legislation and parts are hidden (eg https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto100100). But the guidance is useful and demonstrates where you may face tax and penalty risks if you take a different view. Useful sections are:

Capital gains tax disposals https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto22100

Record keeping https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto10400

Why it isn’t tax free gambling https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto10450

A final thought: what if you don’t sell? Are you sure that the beneficiaries of your will can access the funds on your death, with correct passwords and two level authentication?

*To be fair to football fans I also like cycling but find the cycle to work tax rules equally dull

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