Cryptocurrency Assets and Tax

buildingbee

Hi everyone,

I have recently seen https://www.bbc.co.uk/news/articles/ckgl2je65klo

Now I have a small amount crypto assets, but I have made a loss from the original amount of money that was invested. The article states that we need to declare these assets and could get penalties if we don't.  Does anyone know what the process is and whether I need to declare if I have made a loss?

Thank you.

poseidon1

Via self assessment you would complete form SA 108 ( below ) as a supplement to the main tax return SA100 -

https://assets.publishing.service.gov.uk/media/67e160d5d8e313b503358cc8/sa108-2025.pdf

https://assets.publishing.service.gov.uk/media/67e1612564220b68ed6a7009/SA108-Notes-2025.pdf

However if your original investment was small with a correspondingly small loss, you may wish to consider if self assessing the loss to use against any future capital gains, would be worth the effort.

buildingbee

poseidon1 said:

Via self assessment you would complete form SA 108 ( below ) as a supplement to the main tax return SA100 -

https://assets.publishing.service.gov.uk/media/67e160d5d8e313b503358cc8/sa108-2025.pdf

https://assets.publishing.service.gov.uk/media/67e1612564220b68ed6a7009/SA108-Notes-2025.pdf

However if your original investment was small with a correspondingly small loss, you may wish to consider if self assessing the loss to use against any future capital gains, would be worth the effort.

Thanks poseidon1 for your helpful advice. To help you understand my situation, I'm only talking about £700 originally invested and I'm now unfortunately sitting on a loss of £400.  My main concern is that I don't get hit by some form of penalty (no idea how much this penalty is) for not declaring.that I had crypto.

poseidon1

buildingbee said:

poseidon1 said:

Via self assessment you would complete form SA 108 ( below ) as a supplement to the main tax return SA100 -

https://assets.publishing.service.gov.uk/media/67e160d5d8e313b503358cc8/sa108-2025.pdf

https://assets.publishing.service.gov.uk/media/67e1612564220b68ed6a7009/SA108-Notes-2025.pdf

However if your original investment was small with a correspondingly small loss, you may wish to consider if self assessing the loss to use against any future capital gains, would be worth the effort.

Thanks poseidon1 for your helpful advice. To help you understand my situation, I'm only talking about £700 originally invested and I'm now unfortunately sitting on a loss of £400.  My main concern is that I don't get hit by some form of penalty (no idea how much this penalty is) for not declaring.that I had crypto.

Given you have made no profits and proceeds well under the mandatory reporting threshold of £50k, you are under no obligation to report this disposal at all..

Only if you think it might be worthwhile using the £700 loss in future would you bother to report. However even at the top rate of CGT of 24% ,your loss would only give you £168 in future tax savings. 

buildingbee

poseidon1 said:

buildingbee said:

poseidon1 said:

Via self assessment you would complete form SA 108 ( below ) as a supplement to the main tax return SA100 -

https://assets.publishing.service.gov.uk/media/67e160d5d8e313b503358cc8/sa108-2025.pdf

https://assets.publishing.service.gov.uk/media/67e1612564220b68ed6a7009/SA108-Notes-2025.pdf

However if your original investment was small with a correspondingly small loss, you may wish to consider if self assessing the loss to use against any future capital gains, would be worth the effort.

Thanks poseidon1 for your helpful advice. To help you understand my situation, I'm only talking about £700 originally invested and I'm now unfortunately sitting on a loss of £400.  My main concern is that I don't get hit by some form of penalty (no idea how much this penalty is) for not declaring.that I had crypto.

Given you have made no profits and proceeds well under the mandatory reporting threshold of £50k, you are under no obligation to report this disposal at all..

Only if you think it might be worthwhile using the £700 loss in future would you bother to report. However even at the top rate of CGT of 24% ,your loss would only give you £168 in future tax savings. 

I appreciate the clarification. I thought everyone with a crypto account had to report to HMRC, even if they were just holding small amounts or trading at a loss.

eskbanker

buildingbee said:
I thought everyone with a crypto account had to report to HMRC, even if they were just holding small amounts or trading at a loss.

No - the article isn't particularly well worded, and IMHO should place far more emphasis on the fact that crypto exchanges (not individuals) are now compelled to report annual data (at a personal level) to HMRC, in much the same way that banks and building societies do already:

https://www.gov.uk/government/publications/cryptoasset-reporting-framework/implementation-of-the-cryptoasset-reporting-framework-carf

Alongside that story, they're also trying to convey that crypto gains are already subject to CGT, where they meet the relevant thresholds, and relaying HMRC's hope that people will be proactive ahead of the new reporting regime, but for those such as you with no reportable gains, nothing changes - the fact that penalties may apply if gains exceed the published thresholds and aren't declared is the same before and after this change....

d6fs1l

buildingbee -- have you actually made a disposal (and realised the loss) or is it unrealised?

buildingbee

eskbanker said:

buildingbee said:
I thought everyone with a crypto account had to report to HMRC, even if they were just holding small amounts or trading at a loss.

No - the article isn't particularly well worded, and IMHO should place far more emphasis on the fact that crypto exchanges (not individuals) are now compelled to report annual data (at a personal level) to HMRC, in much the same way that banks and building societies do already:

https://www.gov.uk/government/publications/cryptoasset-reporting-framework/implementation-of-the-cryptoasset-reporting-framework-carf

Alongside that story, they're also trying to convey that crypto gains are already subject to CGT, where they meet the relevant thresholds, and relaying HMRC's hope that people will be proactive ahead of the new reporting regime, but for those such as you with no reportable gains, nothing changes - the fact that penalties may apply if gains exceed the published thresholds and aren't declared is the same before and after this change....

What you've said makes sense.  Unfortunately this is HMRC and they have been given too much powers  IMHO.

d6fs1l said:

buildingbee -- have you actually made a disposal (and realised the loss) or is it unrealised?

Apologies, I don't know what that means.

eskbanker

buildingbee said:

eskbanker said:

buildingbee said:
I thought everyone with a crypto account had to report to HMRC, even if they were just holding small amounts or trading at a loss.

No - the article isn't particularly well worded, and IMHO should place far more emphasis on the fact that crypto exchanges (not individuals) are now compelled to report annual data (at a personal level) to HMRC, in much the same way that banks and building societies do already:

https://www.gov.uk/government/publications/cryptoasset-reporting-framework/implementation-of-the-cryptoasset-reporting-framework-carf

Alongside that story, they're also trying to convey that crypto gains are already subject to CGT, where they meet the relevant thresholds, and relaying HMRC's hope that people will be proactive ahead of the new reporting regime, but for those such as you with no reportable gains, nothing changes - the fact that penalties may apply if gains exceed the published thresholds and aren't declared is the same before and after this change....

What you've said makes sense.  Unfortunately this is HMRC and they have been given too much powers  IMHO.

Can't see it myself - they've always had the power to impose fines for anyone failing to declare income or gains that generate tax liabilities (and crypto gains have already been declarable for CGT purposes for many years, once above thresholds), and will now be provided with some transactional data to help identify if/when that's happening, including exchanging such data with all the 53 other signatory countries....

buildingbee said:

d6fs1l said:

buildingbee -- have you actually made a disposal (and realised the loss) or is it unrealised?

Apologies, I don't know what that means.

Have you actually sold the assets or are they just currently valued below their acquisition price?  It's only the former that would create a tax liability, if there was a large enough gain.

buildingbee

eskbanker said:

buildingbee said:

eskbanker said:

buildingbee said:
I thought everyone with a crypto account had to report to HMRC, even if they were just holding small amounts or trading at a loss.

No - the article isn't particularly well worded, and IMHO should place far more emphasis on the fact that crypto exchanges (not individuals) are now compelled to report annual data (at a personal level) to HMRC, in much the same way that banks and building societies do already:

https://www.gov.uk/government/publications/cryptoasset-reporting-framework/implementation-of-the-cryptoasset-reporting-framework-carf

Alongside that story, they're also trying to convey that crypto gains are already subject to CGT, where they meet the relevant thresholds, and relaying HMRC's hope that people will be proactive ahead of the new reporting regime, but for those such as you with no reportable gains, nothing changes - the fact that penalties may apply if gains exceed the published thresholds and aren't declared is the same before and after this change....

What you've said makes sense.  Unfortunately this is HMRC and they have been given too much powers  IMHO.

Can't see it myself - they've always had the power to impose fines for anyone failing to declare income or gains that generate tax liabilities (and crypto gains have already been declarable for CGT purposes for many years, once above thresholds), and will now be provided with some transactional data to help identify if/when that's happening, including exchanging such data with all the 53 other signatory countries....

buildingbee said:

d6fs1l said:

buildingbee -- have you actually made a disposal (and realised the loss) or is it unrealised?

Apologies, I don't know what that means.

Have you actually sold the assets or are they just currently valued below their acquisition price?  It's only the former that would create a tax liability, if there was a large enough gain.

The issue I have with HMRC is that they tend to go for the easy targets and not the multi-billionaires.

Regarding assets - I've not sold any as yet, but that's because I've made a massive loss, so I doubt I would need to pay any tax at all.

SVaz

You haven’t made a loss until you actually Sell at a loss.   It could just as easily double/triple/quadruple while you hold it or it could drop further - which is all completely irrelevant until you come to sell.