[REPLAY] Crypto Taxes In the UK-2021: The Why, How, and What of Cryptocurrency Taxation

Updated: Nov 23, 2021

Every crypto holder/user, no matter how knowledgeable he/she is, is no exception to tax. All the more reason for you to analyse the every move you have done in this complex system and the taxes you've incurred from those actions.


And because it's tax season, here's a number of things you need to know about cryptocurrency taxes and how you can stay on the right side of the law as presented by Accointing.com.


[00:02:21] Ian Taylor on the UK’s Stand on Crypto

How pro crypto is the UK?
What efforts exist from the government to support/sanction it?

3 Pillars

  • Economic Crime and Illicit Financing

  • Crypto Asset Promotions

  • Stable coins

 

[00:13:40] Joe David on Crypto Tax Regulations

What existing laws exist towards cryptocurrency and where and when do they apply?

Key Regulations

Governing Law

  • For trading: CGT

  • For mining or payments: IT or NIC

Income Tax

  • Mining, staking, LP, and airdrops as income

  • Earnings from employment

Capital Gains Tax

  • Crypto to crypto

  • Crypto to fiat

  • No wash sales (B&B)

Valuations of Tokens

  • Buy and sell dates

  • Cost basis

  • Share pool method

Inheritance Tax

Crypto assets are classified as property for tax purposes

SDRT

  • For land transactions, is considered as money.

  • For lending and borrowing, crypto is considered debt and is subject to SD taxes


 

[00:21:20] Joe David on When Is Crypto Taxed?

What type of crypto transactions are taxed and how should they be classified?

Crypto Tax Classification

Not Taxable

Case by Case

Taxable

  • Crypto received as a gift

  • Buying crypto with FIAT currency

  • Donating crypto to charity or NPO

  • Internal transactions

  • Crypto is regarded as property and not currency

  • Crypto wallet or exchange shutdown

  • Lightning network transactions

  • Blockchain forks

  • Token airdrops

  • Transacting with crypto (fees included)

  • Selling crypto

  • Buying crypto with crypto

  • Crypto mining

  • Crypto received for payments and services reported as income


 

[00:26:45] Joe David on The Best Practices in Crypto Bookkeeping

What are some of the best practices to deal with crypto in the long term and how can knowing these save you lots of money

Tips:


1. Keep a record

  • Keep a record of transactions where you can especially in DeFi. Tracking down the data can be a challenge

2. Engage a professional

  • Engaging with an accountant might sound ominous but the space is complex and requires expertise

3. Do your research

  • The space is complex but basic knowledge of taxes will help ensure you are trading profitably

4. Use a tracking software

  • Tracking software will allow you to use API’s from exchanges and wallets to import all your data

5. Keep a record of any losses

  • Keeping a record of losses is essential if you wish to offset these against any gains to keep a separate log of these

6. Keep track of expenses

  • The crypto space can incur lots of expenses. Keep track of these to ensure you can offset

 

[00:30:49] Joe David on Crypto Accountants

Who are these professionals and how can they help you file your crypto taxes and save your tax returns?

Look for someone who:

  • Knows the concepts

  • Has crypto experience

  • Has clients in multiple areas of crypto

  • Is passionate

  • Has a strong team

 

[00:34:22] Kyle Zhang on the Tools for Crypto Taxes

What tools are available out there and how can they help you file your taxes easily and accurately?

What the solution entails:

  • Country-specific tax output

  • Proof of ownership reports (AML)

  • Interconnectivity

  • User-friendly platform

  • Performance analytics

 

[00:41:02] Q&A

  • How are DeFi stacking returns taxed and what’s the best way of recording them on Accointing?

[00:41:55] Kyle Zhang

[00:42:59] Joe David

[00:43:46] Ian Taylor


  • How do you calculate tax on any gain in assets sold?

[00:45:13] Joe David


  • If you receive income in Bitcoin, do you declare it when you receive the Bitcoin or when you convert it to FIAT at a later date?

[00:47:15] Joe David


  • How do you calculate CGT liabilities?

[00:49:13] Joe David


  • Will you owe tax on assets such as ERC20s and ERC721s if you don’t sell them this tax year?

[00:50:05] Kyle Zhang

[00:50:22] Joe David


  • Does burning/expanding in-game crypto assets count as a taxable event?

[00:51:09] Kyle Zhang

[00:51:40] Joe David

[00:52:39] Ian Taylor

  • Are crypto rebates/cash backs treated as income from a crypto visa card?

[00:55:42] Joe David


  • Can you split CGT gains across other family members to utilise their £12,300 allowance?

[00:56:03] Joe David

  • How about scam airdrops which you never ask for and are impossible to sell due to the contract?

[00:56:55] Joe David

[00:57:31] Kyle Zhang


  • Would you be classified as a trader if a bot is trading for you?

[00:58:02] Joe David

[00:58:29] Ian Taylor

  • What does one do if an exchange closed down and there is no way to recover trade history?

[00:59:21] Kyle Zhang

[01:00:22] Joe David

  • Will HMRC automatically ask for additional information after filling? Any grace period from HMRC in this transition?

[01:01:20] Joe David


  • How do you mark coins acquired through staking as coins that have already been taxed on rather than a new taxable event?

[01:04:17] Joe David



 

Meet Joe David

Joe David is the founder of MYNA, a cryptocurrency accountancy firm. A self-confessed technology geek.


Joe has been a key player in driving the use of technology in the accountancy industry over the last few years through his other practice, Nephos.

Contact MYNA and Joe

Website

LinkedIn

Joe David


Meet Kyle Zhang

Kyle is the co-founder of Accointing, an accounting, tracking and tax optimization tool for Bitcoin and other cryptocurrencies.






Contact Accointing.com and Kyle

Website

LinkedIn

Twitter

Instagram Reddit

Telegram

Youtube

Kyle Zhang


Meet Ian Taylor

Ian is a Finance, Policy and FinTech professional with capital markets, innovation and disruptive technologies expertise. Specialties: Market Structure | Trading | Derivatives | Policy & Regulation | Crypto | DeFi | Blockchain | Speaker | Interest Rates / Fixed Income | Governance | Modelling | Investing | Treasury.


He is also a Qualified accountant (ACCA).


Contact CryptoUK and Ian

Website

LinkedIn

Twitter

Youtube

Ian Taylor


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