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Where Taxpayers and Advisers Meet

declaring cryptocurrency exchange

Joined:Sun Apr 11, 2021 3:47 pm
declaring cryptocurrency exchange

Postby starrynight » Fri Jul 16, 2021 11:33 am


I am filling my first ever self-assessment for the last tax year (2020-2021). In addition to the income from my freelance work, I invested a total of 6000 pounds over a couple of months in various cryptocurrencies last year. I have not sold any currencies and have not withdrawn any money from my wallet but I have done a couple of transactions where I converted one cryptocurrency to another one on the same platform. The gains from these transactions won't be much (maybe a couple of hundreds at best).

Also, because of the fall of the market, my initial investment has now lost around 30% of its original value.

Reading the HMRC guidance, I understand that conversion of cryptocurrency counts as "disposal" and I have to report any gains made in these transactions.

Can you help me with the below questions:

1. Do I need to calculate and report the gains from these conversions, knowing that they won't be more than the capital gain tax-free allowance of 12300? ( I don't have any other assets or gains from other sources)

2. If I have to declare the gains from these transactions, do I have to calculate the gain based on the value of the cryptocurrencies on the day of conversion or today?

Joined:Sat Feb 01, 2014 3:26 pm

Re: declaring cryptocurrency exchange

Postby bd6759 » Fri Jul 16, 2021 10:08 pm

Converting currency means you sold one currency and bought another. That sale might have generated a gain.

You will need to calculate the gain. This is because you need to know the acquisition cost of the new currency. This will be to your benefit because it will be more than the original cost of the first currency.

You won’t need to report the gains unless they exceed the annual exemption, or if the proceeds are more than 4 times the exemption.

The gain is calculated using the values on the day of the transaction.

Return to “Capital Gains Tax, CGT”