Ownership of cryptoassets, either cryptocurrencies or NFT’s, is becoming increasingly common and popular. It is not just individuals who are buying cryptoassets, companies are also now using cryptocurrencies to sell or purchase goods and are investing in cryptoassets. If you are an individual investor, a trader, or a business now using this new form of asset and payment, you need to ensure that you are paying the correct amount of tax on cryptoassets. This is a fast moving and complex area of tax, and it is important that you ensure your tax affairs are structured and compliant.
Whether you are an individual or a business, Farnell Clarke can help you ensure you are in control of your crypto tax affairs so why not speak to us today to see how we can help you.
We have experience in providing recommendations for software which can help you to track and record your cryptocurrency. We can use this information to advise you on your UK tax exposure and opportunities to mitigate this, so that you can focus on running your business and your investments.
We can help you to report your trading income or capital gains from cryptocurrency to HMRC.
The US Tax Team are equipped to provide you with international support when reporting your cryptocurrency income and gains. We consider the tax treaty and your personal residency when providing you with advice on your potential taxes in the US and UK. Alongside this, we take into consideration and apply any applicable tax credits which can help limit your taxes across the US and UK.
We assist a wide range of companies which accept cryptocurrency as payment for their services, hold investments, or make payments using cryptocurrency. We can help them set up systems to record these transactions to create their year-end accounts. For larger companies, our outsourcing team can provide the complete services of an internal finance team from basic bookkeeping to monthly management accounts and strategic planning.
A crypto asset, like Bitcoin, is a digital asset distributed on a ledger across a computer network. Currently, it is not considered to be currency by most countries including the UK.
NFT (Non-fungible tokens) also fall into this category. These tend to be digital artwork or drawings.
For individuals
In general, for an individual whose profits are taxable in the UK, it will either be a capital gain subject to capital gains tax or profits from their trade subject to income tax and national insurance.
Capital gains tax applies to investments in the same way as with stocks and shares. Broadly, the gain is calculated as proceeds, less acquisition cost, and any relevant fees. The total gain in the tax year will be reduced by the annual exemption allowance, with the remainder taxable at the rates applicable to Capital Gains Tax (subject to any other available reliefs).
Income tax applies where the individual is conducting their transactions in the manner of a self-employment instead of as an investment. This means the applicable rates will be the individual’s marginal rate of taxation, and class 4 national insurance.
For companies
For a company, both trading profits and capital gains will be subject to the corporation tax rate on their taxable profits.
For more on Crypto tax why not read our blog on How are Crypto assets taxed?
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