{"id":13957,"date":"2022-01-28T16:31:05","date_gmt":"2022-01-28T16:31:05","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=13957"},"modified":"2024-01-29T18:26:46","modified_gmt":"2024-01-29T18:26:46","slug":"how-to-do-a-cgt-tax-return-for-crypto-shares","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/how-to-do-a-cgt-tax-return-for-crypto-shares\/","title":{"rendered":"How to do a CGT tax return for crypto & shares"},"content":{"rendered":"\n

Do you invest in shares, FX or crypto? Then we can help. Of all the personal tax returns, this can be the most complicated to sort yourself. There\u2019s not only the volume of transactions to consider but the 30 day rule, best practice bookkeeping, the added complications of being tax efficient etc. And it can be a headache for accountants too!<\/p>\n\n\n\n

In this blog, we\u2019ll go over how to use the Taxfix service for your CGT tax return, what documents you\u2019ll need, and how our partners can support you.<\/p>\n\n\n\n

The trouble with CGT tax returns<\/h2>\n\n\n\n

Unless you made profit from selling property, CGT tax returns can be fiddly. When it comes to crypto and shares especially, you can end the tax year with thousands of tiny transactions to sift through. If you\u2019ve traded multiple types of asset, it\u2019s complicated further still. And that\u2019s not even mentioning share matching…<\/p>\n\n\n<\/div> \n\n

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The Bed and Breakfast rule<\/h2>\n

Each tax year, you have a\u00a0 tax-free allowance when it comes to investment profits. For the 2024\/25 tax year, it’s \u00a33,000. It halved from the previously tax year, 2023\/24, when it was \u00a36,000. Anything you earn in excess of this is taxed at the up-to-date Capital Gains Tax rates<\/a>. Your tax-free allowance can\u2019t be carried over<\/strong> into the next year if you don\u2019t use it, so many investors will sell their assets just before the end of the tax year to benefit from the allowance, then rebuy them immediately to reset the base value<\/strong> of their assets. This is known as bed and breakfasting<\/strong>.<\/p>\n\n <\/div>\n <\/div>\n <\/div>\n\n \n \n

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Section 104 holding<\/h2>\n

Hold onto your hat. This can be confusing. A Section 104 holding is a method of pooling your investments<\/strong> of the same class into one asset. Confused? Here\u2019s a cake analogy to help explain. Imagine you buy shares in Amazon, Apple, Microsoft, Meta and Twitter, all at different times and prices. Each of these companies represent different layers of a single (but decadent) cake. The cake as a whole is your Section 104 holding<\/strong>. When you cut a slice of the cake, its value is based on the average cost of the whole, rather than the individual layers.<\/p>\n\n <\/div>\n <\/div>\n <\/div>\n\n \n \n <\/div>\n<\/div> \n\n

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CGT 30 day rule<\/h2>\n

Since 1998, any shares sold and re-bought within 30 days no longer count as a disposal for the purpose of CGT. The 30 day rule prevents investors from bed and breakfasting<\/strong> for favourable CGT purposes. If the same individual assets are bought within 30 days of being sold, they are matched with assets in this order:<\/p>\n

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  1. Assets bought on same day as a disposal (a.k.a the same day rule)<\/li>\n
  2. Any assets bought within 30 days of a disposal<\/li>\n
  3. Assets comprised in a Section 104 holding<\/li>\n<\/ol>\n\n <\/div>\n<\/div> \n\n
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    What should I send to my Taxfix accountant?<\/h2>\n\n\n\n

    With the Taxfix tax return service, you get an accredited accountant to file your tax return for you. They can help you with anything you\u2019re confused about, and everything is submitted for you online for a low, flat fee. <\/p>\n\n\n\n

    When it comes to CGT tax returns, our accountants work fastest with a consolidated CGT report. Love is a strong word\u2026 but they love them. <\/p>\n\n\n\n

    This is because we\u2019re not a bookkeeping service so if you only give us a transaction summary with thousands of individual transactions – especially if you trade crypto – it\u2019s often not possible for us to help. Here\u2019s the information that we need:<\/p>\n\n\n\n

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    1. Proof of transactions<\/li>\n\n\n\n
    2. A CGT report from your broker or online trading platform – usually in the form of a PDF or CSV file <\/li>\n<\/ol>\n\n\n\n

      So what\u2019s the difference between a transaction summary and CGT report?<\/h2>\n\n\n\n

      It\u2019s pretty simple, but easy to mix up. <\/p>\n\n\n\n

      A transaction summary is basically every individual transaction you\u2019ve ever made via your trading platform. To calculate your profits and losses, this is a manual task and almost impossible to do accurately with certain assets (e.g. crypto). <\/p>\n\n\n\n

      In comparison, a CGT report is a compressed version of your transaction history that has the HMRC matching and pooling rules (mentioned above) applied to each of your transactions. You can usually download this directly from your trading platform. Generally, you should send both documents to our accountants so that they can see the proof to back up your totals. <\/p>\n\n\n\n

      Take a look at our CGT calculator to work out how much you might owe based on your total profits.<\/p>\n\n\n

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