Declare crypto on Self-Assessment tax return?

1404

Since the 2020/2021 tax year I have been filing Self-Assessment tax returns as I rent out rooms in my house and make more than the £7,500 Rent-a-Room Scheme allowance.  However, I have never thought to declare my crypto on it.  I am wondering if I need to or should have been?

Below is the money I have put in and taken out of crypto.  It does not include trades/exchanges of crypto.  But although those activities have racked up over the years (I can see the activities on exchanges like Coinbase which keep the records) I am not a trader. I generally buy and hold but do also swap when I feel like it.

As you can see, I've never realised any profits from crypto.  And any paper profits I've made have been short-lived.  

I sold everything in 2020 for just under £4k, but that was at a loss of £1500.  I haven't sold anything since (except for £315 in 2021, as shown below).

Should I declare this on the next tax return I do (which is any day now)?  

EthicsGradient

I've never dabbled, but according to this, "Exchanging one type of cryptoasset for another is a disposal for UK capital gains tax purposes". That seems backed up by the HMRC saying there's a possible gain when you "exchange your tokens for a different type of cryptoasset". So you need to work out the sterling value of anything you've swapped, and compare with with the acquisition cost. Though since it seems you reckon your current total holding is worth £3369 less than you've paid for it, it would need some large price movements in the middle for you to have exceeded the annual CG allowance (unless you've used that up with non-crypto assets, of course).

1404

EthicsGradient said:

I've never dabbled, but according to this, "Exchanging one type of cryptoasset for another is a disposal for UK capital gains tax purposes". That seems backed up by the HMRC saying there's a possible gain when you "exchange your tokens for a different type of cryptoasset". So you need to work out the sterling value of anything you've swapped, and compare with with the acquisition cost. Though since it seems you reckon your current total holding is worth £3369 less than you've paid for it, it would need some large price movements in the middle for you to have exceeded the annual CG allowance (unless you've used that up with non-crypto assets, of course).

I've never had non-crypto assets. I assume you mean NFTs? I've only ever held coins such as BTC, XRP, XLM, DOGE etc etc.


My crypto holding has only recently clawed its way back to £15k. For the last 3 years its been between £4k-£7k. You can see how much money I put in. It's been painful!

That £11k I put in on 25/10/21 was a terrible decision. That was right at the top of the market. The value of that crypto evaporated within months and only now, 3 years later, am I seeing it again.

eskbanker

But the key point is that you need to go to the next level of detail and track all the movements including swaps, trades and exchanges, rather than simply monitoring how much real money is moved into and out of the exchange.

As above, it may be academic to try to calculate the historical position for each prior tax year if all disposals netted to losses, but what is important is that you can identify the base cost of all of your current holdings, in order to determine CGT liabilities whenever you sell/trade/swap in future.

1404

eskbanker said:

But the key point is that you need to go to the next level of detail and track all the movements including swaps, trades and exchanges, rather than simply monitoring how much real money is moved into and out of the exchange.

As above, it may be academic to try to calculate the historical position for each prior tax year if all disposals netted to losses, but what is important is that you can identify the base cost of all of your current holdings, in order to determine CGT liabilities whenever you sell/trade/swap in future.

I can attempt do that.  I've not tried it as yet.  It might be a good exercise as it's then there ready in case I get asked.

I only currently have 3 coins: BTC, XRP and XLM.  My £15k is a fairly even split of the three coins.  And these coins come from the £17,605 I have put into crypto since 3/1/21.  (Apart from about £140 of a random coin which I found had been given to me by an exchange which I knew nothing of until I found it last week.  Was there for years on exchange I haven't used in years.  I exchanged it for BTC).

So do I need to put any of this on my tax return which I'll soon be doing?  If not for the fact I do a tax return each year for my rented rooms my understanding is that I wouldn't have to declare this at all?

masonic

You only need to include the capital gains section in return if you've made disposals in excess of £50k (for past years it was 5x annually exempt amount) or you've made gains above the annually exempt amount.

If you believe you've made losses through your disposals, then you may wish to record that in your return so that you can offset against future gains.

1404

masonic said:

You only need to include the capital gains section in return if you've made disposals in excess of £50k (for past years it was 5x annually exempt amount) or you've made gains above the annually exempt amount.

If you believe you've made losses through your disposals, then you may wish to record that in your return so that you can offset against future gains.

Thank you for that. That's kind of what I thought (if I've understood correctly). To clarify:

1) I don't need to include any of my crypto on my tax return
2) this is because my annual trading/swaps between crypto are less than £50k per year
3) and also because any crypto sold into GBP cash has achieved a profit of under the annual CGT threshold of £3000 (I haven't sold any since 2020, as shown above).


Re #3: my cash withdrawals in 2020 totalling £8069.80 in 20/21 tax year were when the CGT threshold was £12,300. But even so, that withdrawl realised a GBP loss of £1566 from what I put into crypto, as shown above. 



So where do the calculations Eskbanker refer to come into play? I assume it's to confirm that my annual trades are below £50k, and to also confirm that any crypto I sell in future which is over £3000 does not contain any profit? 

eskbanker

1404 said:

masonic said:

You only need to include the capital gains section in return if you've made disposals in excess of £50k (for past years it was 5x annually exempt amount) or you've made gains above the annually exempt amount.

If you believe you've made losses through your disposals, then you may wish to record that in your return so that you can offset against future gains.

Thank you for that. That's kind of what I thought (if I've understood correctly). To clarify:

1) I don't need to include any of my crypto on my tax return
2) this is because my annual trading/swaps between crypto are less than £50k per year
3) and also because any crypto sold into GBP cash has achieved a profit of under the annual CGT threshold of £3000 (I haven't sold any since 2020, as shown above).

Re #3: my cash withdrawals in 2020 totalling £8069.80 in 20/21 tax year were when the CGT threshold was £12,300. But even so, that withdrawl realised a GBP loss of £1566 from what I put into crypto, as shown above. 

So where do the calculations Eskbanker refer to come into play? I assume it's to confirm that my annual trades are below £50k, and to also confirm that any crypto I sell in future which is over £3000 does not contain any profit? 

Just to reiterate, the CGT liability isn't calculated from the value of GBP cash withdrawals from exchanges but from the valuation of disposals when selling/swapping/trading/exchanging crypto assets, whether this is to GBP cash or other crypto assets.

This is all explained in the HMRC guidance linked above:

When to check

You might need to pay Capital Gains Tax when you:

• sell your tokens
• exchange your tokens for a different type of cryptoasset
• use your tokens to pay for goods or services
• give away your tokens to another person (unless it’s a gift to your spouse or civil partner)

Scottex99

Looks like you haven’t traded at a high enough volume for it to impact CGT, but you should still keep an eye on the numbers going forward.

Total £ starting point and total £ end gives you an idea but as mentioned above it’s not just at what GBP number you cash out, any swap between different coins is also a tax event.

Cheers 

1404

I certainly know that I don't need to pay CGT. I'd have needed to have gained capital for that to happen, and I have gained no capital.

I will certainly try to break the financial years down and see what trades I did in each year. Over the years they've racked up. But I'm not a trader and it won't be nearly as much as some other people (not that that's relevant to my tax return).

Where does the £50k per year of disposals come into it then? That doesn't seem to be mentioned on the link. 

ColdIron

1404 said:

Where does the £50k per year of disposals come into it then? That doesn't seem to be mentioned on the link. 

It's an HMRC requirement

It used to be 4 * the Annual Exempt Amount when it was £12,300 but with the new allowances it wouldn't be feasible so it was set at £50,000

• You still need to report your gains in your tax return if both of the following apply:
• the total amount you sold the assets for was more than £50,000
• you’re registered for Self Assessment

https://www.gov.uk/capital-gains-tax/work-out-need-to-pay