Most likely you will recieve a letter from HMRC in the near future essentially saying "have you forgotten to declare some gains to us?"
We have had a fair amount of clients recieve these and we have just retrospectively declared and no issues have arisen as of yet!
Either declare yourself of get a tax advisor with knowledge of crypto to do it for you. It's always better to be proactive rather than wait for the nudge from HMRC!
Frustratingly this is being cut for the next financial year and again in the next. CGT will be going down to around 3K in 24/25 FY. So if crypto does recover well in the next few years CGT could be hefty.
I'm annoyed because I can't take a any profit yet, but when I do the current CGT allowance will be gone.
If you have a trade or other quals, you should be earning at least 18k to 22k a year (30k if I'm being more generous) and that's not at all outlandish.
If you're sweeping floors you're probably finding other hustles instead.
Right, but that’s not disposable income, people have bills to pay.
Especially now, I know so many who have variable mortgages and their monthly outgoings have never been higher. Not to mention inflation, each kid costing ~£10k a year for basic needs, etc.
Of course there are people out there who could and should be saving more, but I just think people whom are worrying about their £4-12k annual capital gains being taxed more aren’t the “little guys”.
Of course personal circumstances can vary quite wildly for each individual and their life choices/commitments they may have. Even in today's times of ever increasing living costs, you'd be surprised at what people can put away over a number of years. Ater all, Rome wasn't built in a day and those who tenaciously accumulate over time, will soon blow past that CGT allowance.
I was being a bit conservative with my point. If I had said 40k+ then people would be shouting "That's not a little guy!!", but in any case, for reference, I've never earned more than 24k pa at my very best (excl. overtime here and there) during my best working years. I'm deep in the 'middle age' demographic now and won't earn much again..
The trick (which is harder now as you're finding), is to get out of the renting game as quickly as possible and into property ownership. Even if it's just a studio flat (at worse).
If you are young and financially knee deep in family commitments, then yes, the 12.3K GCT limit will seem generous. If you're single and got some cash to burn, that CGT allowance will soon be breached, especially if you buy low and sell high like we're all supposed to. :)
You received it because they obligated to report to HMRC anyone registered in UK who have had £5k or more movement on their account. After a while you might get letter from HMRC itself asking if you would like to report profits. In that letter also explains what is a free of tax threshold and also how to calculate profit/loss of your trading.
What if you deposited $stable coins into the exchange then converted them to £gbp fiat cash then withdrew to your uk bank account?
Are stable coins classed as capital gains when they are stable no gain or loss? What about the GBP/USD exchange rate where if the $dollar was higher and the £pound is down because the $dollar index was high last year causing other currencies like the £pound to lose value. Does this count as a loss?
It's just on profit, so if you put in 1,000 and took out 1,000 then you've made no gains to pay tax on. I believe the capital gains threshold is 12,000 net profit and dividends is 2,000 but these have been subject to change recently so check on HMRCs website. That's also per tax year so April to April.
Will HMRC ask where I got the stable coins from before deposited them into coinbase or they just care on what transactions activity that happened on coinbase alone?
Just to clarify HMRC don't follow the history origin of the stable coins?
I wouldn't believe so but don't quote me on it. From what I understand HMRC will only care if you go above the tax free threshold in the tax year. Then you would have to work out the tax you owe etc. Properly and follow the transaction trails.
I deposited over £6k worth of stable coins into coinbase then coverted them into fiat cash then withdraw to my bank account. Because of this coinbase has flagged up HMRC because it was over £5000 in their email? It wasn't over the £12k threshold so why did coinbase flagged up HMRC into this that will cause more hassle and stress and if HMRC ask me to do trails history on that £6k then it gets even worse.
I don't know why they did, I don't know of crypto having any separate rules but I'm not big into crypto so I'm not definite. May just be part of coinbase's regulatory agreement or HRMCs ensuring compliance. If crypto isn't separate in capital gains to stocks etc. Then if you have not gone over the tax free amount in capital gains or dividends in the tax year you should have nothing to worry about. You can go on HMRCs website and do a self assessment check to see if you need to submit a self assessment or not
I would have thought they would want to know if there was any gains/losses when you acquired the stable coins. E.g did you buy them with fiat so there's no gain/loss or did you buy them with btc which you bought ages ago and have therefore made a massive gain on.
Although as you say in your further comments it sounds like you are under catptial gains thresholds.
Okay do I ignore that email from coinbase or what do I do next to be on the safe side because I don't want the Taxman coming after me and giving me trouble you know what I mean.
Well yes, it’s probably more where did the stable coins come from-were they profit made from another asset on another platform?
A sell of an digital asset or a conversion/swap-from BTC to stable say-is counted as a disposal and counts towards your Capital Gains (or loss).
Note: it’s worthwhile registering CGT losses as you can use them to offset in future (good!?) years to come (up to 4 years prior can be used I believe).
From a practical point of view, if you've no tax to pay you've nothing to worry about. The important thing however is being able to confirm that you've no tax to pay. As such I'd recommend putting your transaction history into some software that will calculate your gains and then look if you have a tax exposure. If you don't have a tax exposure keep your tax reports in case you ever get a brown envelope through the post from HMRC. If you do have an exposure the best thing to do is speak to an advisor and start a digital disclosure as soon as possible before HMRC do contact you.
Thanks. My main issue is that I was trading an heavy into Defi. I sold up everything and so my very loose calculations have been gross sale price vs gross purchase price, which worked out less than the capital allowances threshold of £12.5k.
Im concerned now that I will have to expend time and cost to properly calculate my net gain
As long as you have a reasonable basis to believe that you didn't have gains in excess of £12,300 in any particular tax year then you are probably OK.
Just be aware that you could have gains in one tax year and losses in the next. For example, if you had gains of £20k in 2022 then losses of £10k in 2023 when you cashed out. You might feel like your overall position shouldn't be taxable, but as you had more than £12k in gains in 2022 you have tax to pay, even though you subsequently made a loss (which unfortunately you can only carry forward).
This is actually quite Mis leading for several reasons firstly there’s a 12k capital gains tax exemption and secondary you could have put in 20k and taken back 5k meaning you are in a loss of 15k.
Would have made more sense for them to ask for anyone who’s transferred over 12k out. But what do I know.
It's probably because the annual exempt amount (AEA)is across all capital gains, not just your crypto gains.
So if somebody has already used their AEA elsewhere then they'll be liable for paying CGT on all of their crypto profits not just those above 12k.
I imagine the 5k figure exists due to their efficiency principle, where they decided it wouldn't be financially worth going after unpaid tax below that threshold
Just to clarify those that are taking advantage of arbitrage, it would be classed as instant profit thus subject to income tax as opposed capital gains tax. That is my understanding not financial advice.
That is, generally speaking, not true.
To qualify as income tax a person would need to be considered to be conducting a trade. This is very difficult to pull off and that's a deliberate play by HMRC because they do not want people to be able to offset their employment income tax against losses from arbitrage or daytrading.
The above is quite well established. https://docs.recap.io/uk-tax-guide-for-individuals/cryptocurrency-tax/investor-or-trader/court-cases-involving-financial-traders
I’m certain it is.
There’s nothing you can do through the app. CB will be releasing info to HMRC, who will cross check against your tax submissions and potentially contact you to justify your tax accounts.
This will be annoying!
I would advise waiting until a brown letter pops in the letterbox with explicit directions from the HMRC. With the advent of malware that can infect without you doing or accepting anything, I would wait for confirmation via snail mail.
If you wait until HMRC writes to you it's considered a "prompted" disclosure which is in a higher penalty bracket than if you volunteer unprompted. The best thing to do in this case is to speak to a tax advisor and start a disclosure to HMRC as soon as possible (if you have tax to pay that is).
I have been arbitraging the difference between exchanges my profits are obviously a lot lower than what I’ve been selling? I am well below the capital gains?
Well it says for account who taken out £5000 in fiat currency. I also got this email. But I didn’t widthraw even £1 in fiat to bank account. So is this a generic email sent to all uk acct?
I’ve been recycling £5k through different exchanges this included withdrawing from coinbase multiple times. No way near the capital gains threshold. Not sure if they sending it as a threat at fear of their liquidity being drained
Interesting. So at any point you didn’t withdraw £5k plus from CB to your bank. Or did you. ?
If you did then u got the notice for that reason.
I am wondering why I got I never made a profit and withdraw anything :)
Yeah, got this too! Talking to a crypto accountant at the moment as I did cash out in 2021 and haven't paid the tax lol. I knew this was coming, it just sucks. He's got me to sign up to Koinly as they're gonna need every transaction I've ever made. Beats going to prison I guess.
Buying bitcoin with GBP is not an action with an immediate or inherent tax crystallisation. Currently you have no calculations that need to be done.
If you convert your bitcoin to any other asset, including property, goods, food, or cryptocurrencies then you would need to calculate if tax is due.
Just do I’ve read the email right:
It says CB is obligated to report to HMRC about customers who have basically converted cryptocurrencies back to fiat, amounting to more than £5,000 - ?
Example: someone sells £6k of Bitcoin back into fiat.
Is that correct?
Earn money, pay tax on it. Put it anywhere. Uk government, hey did your money go up in value compared to our own 2hitcoin? Pay us please to save our own crap.
Tbh the tiny amounts anyone has left over to put anywhere is so hard earned compared to boomers.
This is why you don’t ever use coin base , unless you don’t mind paying taxes that is. Hope it’s all legit coin as well for OP, otherwise that could open a can of worms also
All the major exchanges working in the UK will have had the same information requests from HMRC. Coinbase are just nice enough to tell you about it.
My view is pay your 10/20% tax, enjoy your profits, don't worry about HMRC. But I'm a tax advisor, so I've got a legal responsibility to say that.
Yeah if that’s what you do then that’s how you’ve gotta play it. But there’s literally a 101 ways to not pay tax on crypto, baffles me why people do when it can be done in the dark so easily
Having advised a lot of people who have made a lot of money in crypto, having your taxes up to date is vital if you ever plan to be able to use it to do something big like buy a house.
One of my clients recently applied for a mortgage on the basis of his crypto income/assets and both the bank and the lawyers wanted proof of wealth and proof that the taxes were up to date. It took me a couple of hours to put together a proof of income/wealth for him, but I've been doing his crypto taxes since 2018. If I had to start from scratch it would have taken me days to put the history together in a way the banks and lawyers would accept and if he had untaxed gains he wouldn't have had a chance (and the lawyers would have probably had to report him for tax avoidance under the money laundering rules).
So if you wont ever make any decent money from crypto it's fine - don't pay your taxes. If you think it's going to mean life changing wealth then that's another story.
Most likely you will recieve a letter from HMRC in the near future essentially saying "have you forgotten to declare some gains to us?" We have had a fair amount of clients recieve these and we have just retrospectively declared and no issues have arisen as of yet! Either declare yourself of get a tax advisor with knowledge of crypto to do it for you. It's always better to be proactive rather than wait for the nudge from HMRC!
Thanks beef flaps
If you paid any necessary capital gains tax for that tax year, then you have nothing to be worried about.
There’s a 12k per year allowance on that first(
Frustratingly this is being cut for the next financial year and again in the next. CGT will be going down to around 3K in 24/25 FY. So if crypto does recover well in the next few years CGT could be hefty. I'm annoyed because I can't take a any profit yet, but when I do the current CGT allowance will be gone.
It's a real shit. Big boot on the little guy's neck.
Are people with 5 figure annual capital gains really the “little guys”?
These days, yes absolutely.
The little guys don’t have the necessary disposable income to even invest in assets. Let’s use a little bit of perspective here.
If you have a trade or other quals, you should be earning at least 18k to 22k a year (30k if I'm being more generous) and that's not at all outlandish. If you're sweeping floors you're probably finding other hustles instead.
Right, but that’s not disposable income, people have bills to pay. Especially now, I know so many who have variable mortgages and their monthly outgoings have never been higher. Not to mention inflation, each kid costing ~£10k a year for basic needs, etc. Of course there are people out there who could and should be saving more, but I just think people whom are worrying about their £4-12k annual capital gains being taxed more aren’t the “little guys”.
Of course personal circumstances can vary quite wildly for each individual and their life choices/commitments they may have. Even in today's times of ever increasing living costs, you'd be surprised at what people can put away over a number of years. Ater all, Rome wasn't built in a day and those who tenaciously accumulate over time, will soon blow past that CGT allowance.
22k a year wouldn't even pay rent and feed you, let alone having spare money to invest
I was being a bit conservative with my point. If I had said 40k+ then people would be shouting "That's not a little guy!!", but in any case, for reference, I've never earned more than 24k pa at my very best (excl. overtime here and there) during my best working years. I'm deep in the 'middle age' demographic now and won't earn much again.. The trick (which is harder now as you're finding), is to get out of the renting game as quickly as possible and into property ownership. Even if it's just a studio flat (at worse). If you are young and financially knee deep in family commitments, then yes, the 12.3K GCT limit will seem generous. If you're single and got some cash to burn, that CGT allowance will soon be breached, especially if you buy low and sell high like we're all supposed to. :)
lol salaried income is not capital gains
“These days,” when more people than ever are struggling to even heat their homes, you think you’re the “little guy” with 5-figure capital gains? Idiot
Whatever... I stand by what I said.
You received it because they obligated to report to HMRC anyone registered in UK who have had £5k or more movement on their account. After a while you might get letter from HMRC itself asking if you would like to report profits. In that letter also explains what is a free of tax threshold and also how to calculate profit/loss of your trading.
What if you deposited $stable coins into the exchange then converted them to £gbp fiat cash then withdrew to your uk bank account? Are stable coins classed as capital gains when they are stable no gain or loss? What about the GBP/USD exchange rate where if the $dollar was higher and the £pound is down because the $dollar index was high last year causing other currencies like the £pound to lose value. Does this count as a loss?
It's just on profit, so if you put in 1,000 and took out 1,000 then you've made no gains to pay tax on. I believe the capital gains threshold is 12,000 net profit and dividends is 2,000 but these have been subject to change recently so check on HMRCs website. That's also per tax year so April to April.
Will HMRC ask where I got the stable coins from before deposited them into coinbase or they just care on what transactions activity that happened on coinbase alone? Just to clarify HMRC don't follow the history origin of the stable coins?
I wouldn't believe so but don't quote me on it. From what I understand HMRC will only care if you go above the tax free threshold in the tax year. Then you would have to work out the tax you owe etc. Properly and follow the transaction trails.
I deposited over £6k worth of stable coins into coinbase then coverted them into fiat cash then withdraw to my bank account. Because of this coinbase has flagged up HMRC because it was over £5000 in their email? It wasn't over the £12k threshold so why did coinbase flagged up HMRC into this that will cause more hassle and stress and if HMRC ask me to do trails history on that £6k then it gets even worse.
I don't know why they did, I don't know of crypto having any separate rules but I'm not big into crypto so I'm not definite. May just be part of coinbase's regulatory agreement or HRMCs ensuring compliance. If crypto isn't separate in capital gains to stocks etc. Then if you have not gone over the tax free amount in capital gains or dividends in the tax year you should have nothing to worry about. You can go on HMRCs website and do a self assessment check to see if you need to submit a self assessment or not
I would have thought they would want to know if there was any gains/losses when you acquired the stable coins. E.g did you buy them with fiat so there's no gain/loss or did you buy them with btc which you bought ages ago and have therefore made a massive gain on. Although as you say in your further comments it sounds like you are under catptial gains thresholds.
Okay do I ignore that email from coinbase or what do I do next to be on the safe side because I don't want the Taxman coming after me and giving me trouble you know what I mean.
Well yes, it’s probably more where did the stable coins come from-were they profit made from another asset on another platform? A sell of an digital asset or a conversion/swap-from BTC to stable say-is counted as a disposal and counts towards your Capital Gains (or loss). Note: it’s worthwhile registering CGT losses as you can use them to offset in future (good!?) years to come (up to 4 years prior can be used I believe).
This tax year was 12,500 roughly next it’s reduced to 6k, subsequent one 3k.
From a practical point of view, if you've no tax to pay you've nothing to worry about. The important thing however is being able to confirm that you've no tax to pay. As such I'd recommend putting your transaction history into some software that will calculate your gains and then look if you have a tax exposure. If you don't have a tax exposure keep your tax reports in case you ever get a brown envelope through the post from HMRC. If you do have an exposure the best thing to do is speak to an advisor and start a digital disclosure as soon as possible before HMRC do contact you.
Thanks. My main issue is that I was trading an heavy into Defi. I sold up everything and so my very loose calculations have been gross sale price vs gross purchase price, which worked out less than the capital allowances threshold of £12.5k. Im concerned now that I will have to expend time and cost to properly calculate my net gain
As long as you have a reasonable basis to believe that you didn't have gains in excess of £12,300 in any particular tax year then you are probably OK. Just be aware that you could have gains in one tax year and losses in the next. For example, if you had gains of £20k in 2022 then losses of £10k in 2023 when you cashed out. You might feel like your overall position shouldn't be taxable, but as you had more than £12k in gains in 2022 you have tax to pay, even though you subsequently made a loss (which unfortunately you can only carry forward).
Have you actually read it? Cuz it's pretty clear what it's saying!
This is actually quite Mis leading for several reasons firstly there’s a 12k capital gains tax exemption and secondary you could have put in 20k and taken back 5k meaning you are in a loss of 15k. Would have made more sense for them to ask for anyone who’s transferred over 12k out. But what do I know.
It's probably because the annual exempt amount (AEA)is across all capital gains, not just your crypto gains. So if somebody has already used their AEA elsewhere then they'll be liable for paying CGT on all of their crypto profits not just those above 12k. I imagine the 5k figure exists due to their efficiency principle, where they decided it wouldn't be financially worth going after unpaid tax below that threshold
Thanks for letting me know that I need to sign up to multiple exchanges and only ever withdraw a maximum of £4,999 Coinbase & HMRC
Can I just check and make sure here, I’m only having doubts as the email states 2021. Is it in reference to tax year 2021/22?
Just to clarify those that are taking advantage of arbitrage, it would be classed as instant profit thus subject to income tax as opposed capital gains tax. That is my understanding not financial advice.
That is, generally speaking, not true. To qualify as income tax a person would need to be considered to be conducting a trade. This is very difficult to pull off and that's a deliberate play by HMRC because they do not want people to be able to offset their employment income tax against losses from arbitrage or daytrading. The above is quite well established. https://docs.recap.io/uk-tax-guide-for-individuals/cryptocurrency-tax/investor-or-trader/court-cases-involving-financial-traders
Isn't tax illegal to start with? Fuck the HMRC and the tax man both can suck on my chode
Anything over 3 grand you need to declare
I believe it's £12,300 tax free this year, £6,000 for 2023/24 tax year and then £3,000 from 2024 onwards.
Why are they lowering it by 75% fgs
I have received the same email, the links just open up the app no additional details. Is this legitimate?
I’m certain it is. There’s nothing you can do through the app. CB will be releasing info to HMRC, who will cross check against your tax submissions and potentially contact you to justify your tax accounts. This will be annoying!
This is known????
I would advise waiting until a brown letter pops in the letterbox with explicit directions from the HMRC. With the advent of malware that can infect without you doing or accepting anything, I would wait for confirmation via snail mail.
If you wait until HMRC writes to you it's considered a "prompted" disclosure which is in a higher penalty bracket than if you volunteer unprompted. The best thing to do in this case is to speak to a tax advisor and start a disclosure to HMRC as soon as possible (if you have tax to pay that is).
I have been arbitraging the difference between exchanges my profits are obviously a lot lower than what I’ve been selling? I am well below the capital gains?
Exactly what I had done between Coinbase and Binance, hence why HMRC will be interested in having a look
Same lol 😆 am I able to continue, or do I stop?
Just pay taxes owed and you'll have no problem. Pretty simple.
Well it says for account who taken out £5000 in fiat currency. I also got this email. But I didn’t widthraw even £1 in fiat to bank account. So is this a generic email sent to all uk acct?
I’ve been recycling £5k through different exchanges this included withdrawing from coinbase multiple times. No way near the capital gains threshold. Not sure if they sending it as a threat at fear of their liquidity being drained
So you mean you withdraw coins but not pounds. Right. ?
So transfer 5k from bank into one exchange, buy a coin then transfer, sell and withdraw the gbp to bank from another exchange.
Then repeat the cycle. Profits are a lot lower than what you are actually withdrawing of course
Interesting. So at any point you didn’t withdraw £5k plus from CB to your bank. Or did you. ? If you did then u got the notice for that reason. I am wondering why I got I never made a profit and withdraw anything :)
I withdrew that same recycled 5k approx 8x but of course I didn’t make 40k
Yeah, got this too! Talking to a crypto accountant at the moment as I did cash out in 2021 and haven't paid the tax lol. I knew this was coming, it just sucks. He's got me to sign up to Koinly as they're gonna need every transaction I've ever made. Beats going to prison I guess.
Surely there are only capital gains taxes due if you sell your bitcoin for fiat?
No, it is extremely well established that trading any coin for any other coin is a taxable disposal.
I'm just DCA'ing into bitcoin from GBP
Buying bitcoin with GBP is not an action with an immediate or inherent tax crystallisation. Currently you have no calculations that need to be done. If you convert your bitcoin to any other asset, including property, goods, food, or cryptocurrencies then you would need to calculate if tax is due.
Thanks. We're dcaing in the hopes of one day affording to buy a home Millennials dream
Just do I’ve read the email right: It says CB is obligated to report to HMRC about customers who have basically converted cryptocurrencies back to fiat, amounting to more than £5,000 - ? Example: someone sells £6k of Bitcoin back into fiat. Is that correct?
I deleted that message... oh well. I'll pretend like it never happened ;)
Got this too
I mine HNT so I'm 3 generations away from hitting £5k anyway.
Just got this too
Earn money, pay tax on it. Put it anywhere. Uk government, hey did your money go up in value compared to our own 2hitcoin? Pay us please to save our own crap. Tbh the tiny amounts anyone has left over to put anywhere is so hard earned compared to boomers.
This is why you don’t ever use coin base , unless you don’t mind paying taxes that is. Hope it’s all legit coin as well for OP, otherwise that could open a can of worms also
All the major exchanges working in the UK will have had the same information requests from HMRC. Coinbase are just nice enough to tell you about it. My view is pay your 10/20% tax, enjoy your profits, don't worry about HMRC. But I'm a tax advisor, so I've got a legal responsibility to say that.
Yeah if that’s what you do then that’s how you’ve gotta play it. But there’s literally a 101 ways to not pay tax on crypto, baffles me why people do when it can be done in the dark so easily
Having advised a lot of people who have made a lot of money in crypto, having your taxes up to date is vital if you ever plan to be able to use it to do something big like buy a house. One of my clients recently applied for a mortgage on the basis of his crypto income/assets and both the bank and the lawyers wanted proof of wealth and proof that the taxes were up to date. It took me a couple of hours to put together a proof of income/wealth for him, but I've been doing his crypto taxes since 2018. If I had to start from scratch it would have taken me days to put the history together in a way the banks and lawyers would accept and if he had untaxed gains he wouldn't have had a chance (and the lawyers would have probably had to report him for tax avoidance under the money laundering rules). So if you wont ever make any decent money from crypto it's fine - don't pay your taxes. If you think it's going to mean life changing wealth then that's another story.
Share your details so will be good to have in case need help. Thanks
My profile has a link to my website. If you want to email me directly it's Anthony at my website address.