The short version: Bitcoin is a cryptocurrency. In the UK, HMRC treats it as a taxable asset. If you sell it for a profit, you may owe Capital Gains Tax. If you earn it through mining, that’s Income Tax.
When do you pay tax?
Selling Bitcoin for more than you paid? That’s a capital gain. Swapping it for another crypto? Also a disposal, also potentially taxable. Using it to buy something? Same deal.
Mining Bitcoin counts as income. You’ll pay Income Tax on the value when you receive it, and possibly National Insurance too.
What about losses?
If you sell at a loss, you can offset that against other gains in the same year or carry it forward to future years. Keep good records of every transaction.
Do I need to report it?
If your gains are above the Capital Gains Tax allowance (currently £3,000), yes. You’ll need to file a Self Assessment tax return.
Got crypto gains or losses you need to report? Talk to us and we’ll help you get it right.
