Introduction
Hey there, crypto enthusiasts! Whether you’ve been riding the Bitcoin wave since the early days or have just dipped your toes into the world of digital currencies and NFTs – we’ve got you covered!
As your go-to Cryptocurrency, NFT & Blockchain Accountant, we at ESDG Accountancy are dedicated to helping you navigate the financial complexities of this evolving market. There’s not many situations we haven’t seen before – we understand crypto and aren’t scared of it like many traditional high street accountants. Buckle up and let’s dive into the world of crypto accounting…
Why do you need a Cryptocurrency and Blockchain Accountant?
Capital Gains Tax – Reporting your gains:
If you’ve made gains from buying and selling cryptocurrencies, you’re subject to Capital Gains Tax. The HMRC considers cryptocurrencies as assets, and when you dispose of them (through selling, exchanging, or gifting), you may be liable for tax on your gains. Our expert accountants will help you calculate your gains, determine your tax liability, and ensure you stay compliant with UK tax regulations.
Capital Gains Tax – Making the most of your losses:
Every cloud has a silver lining… If you have made a loss on cryptocurrency you should not overlook the advantages of still submitting a tax return.
Your cryptocurrency or NFT losses can often be used and offset against other capital gains (which don’t need to be cryptocurrency related!) you may have incurred that year as well as being carried forward to use in future years. The tax return fee can quickly pay for itself in these situations.
Capital Gains Tax – Pitfalls to watch out for: Bed & Breakfasting:
The “bed and breakfasting” rule is a tax regulation that affects the calculation of capital gains when an asset is sold and repurchased within a 30 day period. In this scenario, the capital gain calculation uses the repurchase cost rather than the original purchase cost, potentially reducing the capital loss claimed.
For example, let’s say you bought Bitcoin for £5,000 and its value dropped to £2,000. If you sell it and repurchase Bitcoin within 30 days for £2,500, the bed and breakfasting rule would apply. In this case, your capital loss would be calculated using the repurchase cost of £2,500 instead of the original £5,000, reducing the capital loss from £3,000 to £2,500.
Cryptocurrency and Blockchain Limited Company Contractors
As well as our personal tax services for cryptocurrency holders, we also work with cryptocurrency and blockchain Limited Company day rate Contractors.
For those working within the blockchain industry and operating via a Limited Company, our specialised accounting services can help you manage your business’s financial records and stay on top of your tax obligations.
Services Offered by a Cryptocurrency and Blockchain Accountant
-
- Tax planning and advice
-
- Crypto capital gains calculations
-
- Income tax and national insurance calculations
-
- VAT guidance
-
- Record-keeping and bookkeeping assistance
-
- Personal tax return filing
-
- New company formation for blockchain businesses
FAQs
How are cryptocurrency gains taxed in the UK?
Crypto gains are subject to Capital Gains Tax, with the rate depending on your overall income and the amount of your gains. Basic rate tax payers will typical pay 10% where as higher rate and additional tax payers will pay 20%. Your Cryptocurrency and Blockchain Accountant will help you calculate your tax liability and make use of all available allowances.n
Do I need to report my crypto transactions to HMRC?
Yes, if you’ve made gains from buying or selling cryptocurrencies, you must report these transactions to HMRC. If you have made a loss overall you could also be missing out on tax benefits by not reporting your losses. For the 23/24 tax year onwards HMRC require a separate section on the tax return to be completed for cryptocurrency transactions.n
Are crypto mining profits taxable?
Yes, if you mine cryptocurrencies as a business, your profits are subject to Income Tax and National Insurance Contributions, or Corporation Tax if you operate via Limited Company structure.
What records should I keep for my crypto transactions?
You should keep full records of your crypto transactions, including dates, amounts, and the fair market value of the cryptocurrencies involved. It is important to download these statements regularly if you use an online service – as many cryptocurrency service providers are not long-established businesses and there is no certainty that they will exist in future.
Next Steps
Navigating the accounting and tax complexities of the cryptocurrency, NFT & blockchain world can be challenging – with potentially significant consequences if misunderstood. With the help of a skilled Cryptocurrency & Blockchain Accountant like ESDG Accountancy, you can confidently manage your taxes and keep compliant with HMRC.
By choosing us as your trusted accounting partner, you’ll gain access to a wealth of expertise and experience in the cryptocurrency and blockchain space. Our team is dedicated to staying up-to-date with the latest industry developments, ensuring that you always receive the best advice and service.
If you need help reporting gains or losses on cryptocurrency or NFTs, send us an enquiry today for a free introductory call.
So, go ahead, HODL on, and embrace the exciting world of digital currencies with confidence.
