Crypto-currency trading profit is subject to tax in the UK. An individual living in the UK and holding Crypto assets such as bitcoin or other crypto-currencies is taxed on the profits made from the gains.
These gains must be recorded and reported to HMRC via a self-assessment personal tax return if held personally or via a corporation tax return if held via a limited company.
Usually private investors will treat income from crypto-assets as capital gains, however there are times when the gains can be classified as trading profits and subject to income tax rules.
Capital gains tax (CGT) is based on the difference between the price at which the asset was acquired and the amount at which it sold/traded for, i.e. profit from trading. There is also a tax-free allowance, known as the ‘Annual Exempt Amount’, which individuals have before capital gains tax is assessed.
Accurate trading records need to be kept to ensure the correct gains and losses calculations are made for tax. Nasa Consulting advise its clients on relevant and user friendly software for record keeping.