In brief, you need to complete a Self-Assessment and submit it to HMRC. I have created a link below to the relevant page.
Why do you need to complete a Self Assessment?
The simple reason is because if you don’t, then HMRC are unlikely to know that you have made a profit and therefore owe tax.
This sounds great at first; however, if you choose not to declare your profits and pay the required tax owed you could face enforcement action which could consist of a fine, taking control of your goods or even prosecution resulting in a possible prison sentence.
Always pay the tax man!
Before attempting to complete your Self Assessment you will need to gather the information HMRC require.
Below I have created a short list for you to use as a starting point. It is not exhaustive and you are likely to require some additional information depending on the type of investor/trader you are.
Self Assessment Information List:
- What was the date and time of the Cryptocurrency you purchased this tax year (Since 6th April).
- What was the purchase price of the currency and how much did you purchase?
- What was the sale price of the currency and how much did you sell?
- What was the Profit/Loss made on each investment/trade?
- What was the total amount invested in the past year (FIAT/Cryptocurrency to Cryptocurrency)?
- What was the total amount of profit in the past year (Cryptocurrency to Cryptocurrency/FIAT)?
- Were any costs incurred when buying, selling, transferring the funds?
If you haven’t been keeping track of the purchase prices and sale prices etc fear not. It is highly likely that the exchanges that you have been using to buy and sell the currency will have.
Many of the exchanges even provide the ability to download a copy of all of your transactions via a Microsoft Excel Spreadsheet (.csv file).
Once you have this information to hand you will be able to make a good start with your Self Assessment Form.
I would always recommend that you read the content in relation to this directly from HMRC’s website so as to remain informed of any updates to personal taxation.