Crypto Asset nudge letters being sent to individuals

Tax Advice » November 19, 2021

HMRC are sending out nudge letters to individuals who they believe have held crypto assets based on third party information. In the main, crypto exchanges are hard to track. This makes working out what, if anything, to report on a tax return very difficult for many individuals and mistakes and omissions can happen.

Clients who have used, bought or sold crypto assets between 6 April 2020 and 5 April 2021, should check whether they have a reporting obligation.

Most disposals of crypto assets are subject to Capital Gains Tax (CGT), so if the gains for the year are more than £12,300 (the CGT annual allowance), they may need to report the disposals via their UK self-assessment tax return. Alternatively, if they are in fact carrying on a business through crypto transactions (ie frequent trading in crypto assets), that may fall within the income tax regime and they may have income tax to pay.

If the tax position is complex, for example the crypto transactions involve buying and selling Non-Fungible Tokens (NFT) or DeFi (Decentralised Finance), clients may require specialist crypto tax advice.

Latest Articles

Management Buy Out – Changes by HMRC
Clients moving overseas - tax considerations
The Financial Remedies Journal
Principal Private Residence (PPR) restriction for married couples living apart
A taxable gain on a property that has gone down in value?