CGT on crypto, is my plan sound ?

optoutDB

CGT has just entered my consciousness. Due to the allowance being drastically cut and the fact that I could be looking at profits rather than losses for a change.

I understand that allowances can't be saved up from previous years? (Did that change? eg 25 years ago I thought you could spread out the gain over all the years you owned the asset and add up all the allowances) 

One of my coins is showing a £5k profit currently.  And the other is showing a £4k loss.  Both are outside my pension and ISA.

I plan to sell the profitable coin before tax year ends, and buy something equivalent inside my ISA (a crypto ETF). 

And then do the same thing next year should the losing coin approach £3k profit.

I'd rather do nothing, but am working on the assumption that that would cost me in future if they keep going up.

Jeremy535897

Annual exemptions could never be carried forward. So long as your coins are not the same asset (say one is Bitcoin and the other is Ethereum), you can do what you say (sell the profitable coin by 5 April 2024 and the other one after 5 April 2024) and pay no capital gains tax, assuming you have no other gains in the two tax years. If they are both Bitcoin, you have to pool their base costs.

bazdvd

out of curiosity, my son has around 300k in crypto with ethereum. What sort of tax would he pay on such a large sum? Sorry to hijack this thread but it got me wondering

uknick

bazdvd said:

out of curiosity, my son has around 300k in crypto with ethereum. What sort of tax would he pay on such a large sum? Sorry to hijack this thread but it got me wondering

Depends on the gain.

eskbanker

bazdvd said:

out of curiosity, my son has around 300k in crypto with ethereum. What sort of tax would he pay on such a large sum? Sorry to hijack this thread but it got me wondering

CGT is calculated on the gain on a specific disposal rather than its sale value, so he'd have to deduct the acquisition cost of however much he sold in order to determine the chargeable gain:

https://www.gov.uk/capital-gains-tax/print

bazdvd

he has only spent a couple of thousand to get to this point so im guessing he would be taxed quite heavily.
Thanks for the advice

uknick

bazdvd said:

he has only spent a couple of thousand to get to this point so im guessing he would be taxed quite heavily.
Thanks for the advice

He's paid £2k and now has something worth £300k?  Unless it all goes pear shaped he's going to have a lot of tax to pay at some time. 

optoutDB

So I'm just discovering that the CGT allowance isn't 'intended' to be used every year, eg not being able to sell and buy back the same share, I'm assuming that applies to crypto coins too although I'm wary of making any assumptions in this area. But you can sell & buyback if you sell outside and buy back inside ISA or SIPP. 

Sadly, I can't find any crypto ETFs available at ii so now I might have to jump out of one coin and into another as I don't want to exit the current crypto bull-run.