UK Resident? Find Out if You Owe Tax on Crypto

UTC by Andy Watson · 6 min read
UK Resident? Find Out if You Owe Tax on Crypto
Photo: eToro

On Wednesday 21 August, eToro UK, HMRC and ICAEW held a webinar on the tax treatment of cryptoassets for individuals, the crypto landscape and the future of crypto.

A number of questions were submitted during the Q&A which have been collated and answered below. The full record of the webinar can be found here.

Question: What if your broker does not supply the information in GBP?

Answer: Your broker will supply information in a fiat currency. If it does not supply information in GBP, it is up to the individual to convert this to GBP which can be done on numerous websites, such as the Financial Times’ currency converter. Find out if you could owe tax using eToro’s crypto tax calculator.

Question: Can CFD transactions on crypto be included and how far back can you claim Capital Gains Tax losses on crypto?

Answer: Yes, CFD transactions are included and you can claim up to four years back, however you must claim the loss as part of your tax return.

Question: Do I need to keep track of all the transactions I have made?

Answer: It is advised that customers keep a record of all transactions. The onus is on the individual to keep a record.

Question: Is there an age restriction when it comes to paying taxes?

Answer: No. You are liable for taxes at any age.

Question: Will eToro provide statements by tax year?

Answer: Yes.To access your statements:

  • Login to your eToro account and click Portfolio (on the left-hand navigation bar).
  • Select History (the small clock icon).
  • Click the Settings icon (the small cog) on the right-hand side of the page and select Account Statement.
  • Change the start date and end date to the start and end of the tax year, you will receive all statements for this period.

Question: Are token wallets secure?

Answer: Yes.

Question: What information does eToro provide to HMRC, and how often?

Answer: eToro has tax compliance and regulatory responsibility to HMRC on an annual basis, as with all brokers and exchanges.

Question: What exchange rate can we use as we are trading in USD on eToro?

Answer: It is up to the individual to calculate the exchange rate on the day of disposal. You can do this on Financial Times’ currency converter.

Question: As trades are in USD, will eToro add the option to choose local currency in report settings and include these amounts in the downloadable reports based on the exchange rate at the time of purchase and disposal?

Answer: eToro will continue to report in USD. It is up to the individual to find out the exchange rate at the time of purchase and disposal.

Question: Will eToro build some kind of automated tax reporting feature into the system?

Answer: eToro is execution only and does not provide tax advice nor reporting. We highly recommend that you seek professional advice when it comes to calculating tax.To help customers understand tax and if you might owe tax, we have created a tax calculator which allows you to input all crypto transactions, calculate gains and losses, and export to a CSV.

Question:Is it mandatory to report your investments to HMRC even if there was no profit made?

Answer: No, your tax obligation is only on disposal. It is up to the individual to calculate any gains or losses made through crypto trades.

Question: I assume eToro has a record of all these transactions, so why would we need to do it?

Answer: eToro retains a record of these transactions, however eToro is execution only. That means we execute trades only and do not calculate tax nor provide tax advice. It is up to the individual to calculate gains or losses on crypto.

Question: Am I liable for tax when I buy crypto with GBP and sell for USD?

Answer: Yes, we recommend you seek advice from a professional to calculate any gains or losses on your trades. eToro has created a crypto tax calculator to help customers understand if they might owe tax.

Question: What do you do if you haven’t kept the details of the exchange transaction between cryptocurrencies?

Answer: You should be able to ask your exchange or broker for your transaction history.

Question: What if I do not know the value of the pound at the time you traded your cryptoassets in the past? What value would you use as reference? Is there a website?

Answer: A number of websites will provide historical value on GBP, i.e. Financial Times’ currency converter. To understand if you might owe tax, use our crypto tax calculator.

Question: Do we need to pay taxes on every crypto that we buy or sell on eToro, even if it’s a CFD?

Answer: Yes, you could owe tax on all crypto trades whether that is an investment in the underlying asset or a leveraged product.

Question: When trading cryptos, you might have few trades a day between cryptos, how do we record these losses / gains? Should I rely on my broker or exchange to produce a report of such activity?

Answer: Your broker or exchange should keep a record of all your trades. It is up to the individual to calculate gains or losses on crypto trades.

Question: What is our tax liability towards CFDs?

Answer: Please seek advice.

Question: As the assets are virtual, how secure are they?

Answer: The assets are secured in the blockchain using cryptography.

Question: I am a Spanish national using EUR from a Spanish account on eToro. I live, work and pay taxes in the UK. I am a full-time teacher. I have bought bitcoin on eToro, which I am still playing with. Would I pay tax in the UK? Do I pay when I finish and put that money into a UK account (in GBP) and do I pay even if I intend to put this money back into my Spanish account?

Answer: Please seek advice.

Question: Are profits made on CFD taxable?

Answer: Yes, realised gains made on CFD products are liable for tax.

Question: Are exchange fees deductible from trade profits / loss?

Answer: Please seek advice.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk CFDs work, and whether you can afford to take the high risk of losing your money.

Applies to UK taxpayers only.

The information above does not constitute financial advice, always speak to a tax professional to ensure it is right for your specific circumstances.

eToro does not represent any government entity. You should check with a tax professional or HMRC if you are paying the right amount of tax.

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