The Chartered Institute of Taxation (CIOT) has emphasised the importance of accurate and timely tax reporting for all crypto-asset owners.
UK crypto investors are urged to review their tax responsibilities as HMRC begins issuing “nudge letters” to those it suspects may have underpaid tax on their crypto gains.
Gary Ashford, chair of CIOT’s Crypto Assets Working Group, highlighted that many investors may be unaware that profits from crypto assets are subject to income tax or capital gains tax (CGT). He advised that even those who do not receive a letter should review their crypto activity and ensure they comply with tax regulations. Ashford also pointed out that tax liabilities can arise even if investments appear unprofitable. Activities such as selling, lending, “staking” crypto assets, or transferring them between portfolios can trigger a taxable event. He warned that these transactions are taxable within the relevant tax year, regardless of whether the overall portfolio shows a loss after the year ends.
From April 2024, the CGT reporting threshold for those outside self-assessment has been reduced to £3,000, down from £6,000 and significantly lower than the £12,300 limit before April 2023. This change means more individuals may find themselves subject to CGT reporting and payments without realising it. Those with taxable gains exceeding this threshold, including from crypto assets, must report them to HMRC and pay any tax due or face potential interest and penalties.
While HMRC has implemented measures to assist taxpayers, such as a dedicated section for reporting crypto disposals in the 2024/25 tax returns and a disclosure service for previous years’ disposals, the CIOT is calling for additional efforts to raise awareness of these obligations.
If you think you have not complied with your reporting obligations and would like help, please get in touch with us on 01223 810100.
