Changes to the self-assessment tax return signal HMRC’s intention to go after those buying and selling cryptoassets. Tax returns for 2024/25 will contain special questions relating to capital gains or losses resulting from transactions in cryptoassets, e.g. Bitcoin. Therefore, you should keep up-to-date records of any such transactions; date, value in sterling and dealing costs.
Tax return changes: HMRC has already set out its design for self-assessment tax returns for 2024/25. The return will include dedicated questions in the capital gains pages (Form SA108) for purchases and sales of cryptoassets such as Bitcoin and Ethereum.
Special attention: It’s apparent HMRC considers that many taxpayers are not reporting or incorrectly reporting gains or losses they’ve made from investing in cryptoassets. January 2024 YouGov statistics showed 10% of the adult population has bought or own them. Of course, this doesn’t mean they’ve all made gains that ought to have been declared to HMRC, but HMRC believes that there’s a lack of awareness of when a declaration is required.
Exemption reduction: Another factor makes undeclaration increasingly likely. In the space of a year the annual exempt amount for capital gains has been reduced from £12,300 (as it stood on 5 April 2023) to where it stands now at just £3,000. This means that if the aggregate of all your capital gains, net of any capital losses, made in 2024/25 exceeds £3,000, you will have to pay capital gains tax (CGT) on the excess at 10% if you’re a basic rate taxpayer, or 20% if you pay at the higher or additional rate.
Guidance for holders of cryptoassets: As well as understanding what and how to report, it’s essential that you keep a record of each cryptoasset transaction, i.e. the date, its value in UK sterling and any dealing or brokers’ costs ( as these are CGT deductible). Keeping good records will make your life much easier in deciding if you need to include a declaration to HMRC and whether you have CGT to pay.
For more information – call Tristan Wilcox-Jones, Samantha Gillham or Lucas Knight on 01225 445507 to arrange a no-obligation meeting.
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