Crypto Asset Reporting in Self Assessment Tax Returns

At the beginning of 2023, the government announced it would amend tax forms from 2024 to ensure that any gains made from trading crypto assets were declared correctly.

The self-assessment tax return form will soon feature a standalone section for individuals and trusts which had disposed of crypto assets.

Despite the lack of a standalone section for crypto assets to date, it’s important to remember that transactions should still have been considered and potentially reported on a self-assessment tax return where required and should always be provided to your tax advisor for review.

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so, what are cryptocurrencies?

‘Crypto assets’ or ‘cryptocurrencies’ were originally designed as a form of electronic cash for peer-to-peer transactions.

The popularity of crypto assets has risen significantly since inception in 2009, leading to variances in value and creation of many different forms of crypto assets.

Considerable gains and losses were made by investors in crypto assets through ‘trading’ with each other, leading to interest from governments around the world. Others made income through mining for crypto assets.

what’s the GUIDANCE ON REPORTING CRYPTO TRANSACTIONS?

With the fast-paced changing landscape in the crypto world, keeping up with changes has proven difficult for individuals, businesses and HMRC alike.

For the last couple of years, HMRC have obtained the contact details of those trading in crypto assets on the main crypto exchanges like Coinbase, Binance or Kraken. This means it’s important you consider your transactions each year and provide this information to your tax advisor to ensure it’s reported correctly, and exemptions and reliefs are utilised where possible.

If you think you might need to report previous transactions to HMRC, you should contact your advisor.

HMRC are of the view that tax is due on mining for crypto assets and crypto asset transactions and have since provided detailed guidance. At a very high level:

• If you’re mining or ‘trading’, then you may need to pay Income Tax and National Insurance (NI) and potentially report on a self-assessment tax return.
• If you’re making capital gains/losses when buying, selling or exchanging crypto assets, then the transaction needs to be considered and potentially reported on a self-assessment tax return.

Please remember: a transaction’s potentially taxable when you exchange the crypto asset for anything else including another crypto currency, not just when you convert the crypto asset to currency or withdraw funds from your crypto account.

To assist you with gathering information for your tax return, many of the major exchanges and brokers provide tax reports detailing transactions over a particular time period, so please make sure these are provided to your tax advisor.

Whilst reporting may be required, it’s important to know this doesn’t mean tax is always payable due to certain exemptions and reliefs that might be available. Self-assessment tax returns are due annually by 31 January following the end of the tax year if filing electronically. Payment of any tax is also due by the same date.

Given the complexities surrounding crypto asset taxation, seeking professional guidance from those experienced in the field is highly recommended. At Fortus, we can provide tailored advice based on your specific circumstances, help with self-assessment tax returns, and ensure compliance with tax regulations.

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