{"id":22151,"date":"2022-11-29T14:40:39","date_gmt":"2022-11-29T14:40:39","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=22151"},"modified":"2024-01-29T18:11:04","modified_gmt":"2024-01-29T18:11:04","slug":"how-to-avoid-paying-tax-on-cryptocurrency","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/how-to-avoid-paying-tax-on-cryptocurrency\/","title":{"rendered":"How to avoid paying tax on cryptocurrency"},"content":{"rendered":"\n<p>Let\u2019s talk crypto! It\u2019s cool, it\u2019s innovative, and it\u2019s one of the few things that isn\u2019t fully-regulated by the government. But does that mean you can avoid paying the tax you owe?<\/p>\n\n\n\n<p>Uh-uh. \ud83d\ude45<\/p>\n\n\n\n<p>In the UK, crypto is very much subject to tax. And if you owe it, you can\u2019t avoid paying it! But there are a few ways you can navigate the dreaded \u2018crypto-tax\u2019 (without getting on the wrong side of HMRC, of course).<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what is tax-efficiency?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/93RKUoFKaXM?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Understand the tax-free thresholds<\/h3>\n\n\n\n<p>First things first, you won\u2019t have to pay tax on your crypto profit if it falls below a certain amount.<\/p>\n\n\n\n<p>\ud83d\udc49 For capital gains tax (CGT), the threshold is \u00a33,000 in the tax year 2024\/2025, halved from \u00a36,000 in the 2023\/24 tax year. So if you sell or exchange, you only pay capital gains tax on the profit that\u2019s over this amount. Want to know the current CGT rates? Have a look <a href=\"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/capital-gains-tax-rates\/\">here<\/a>.<\/p>\n\n\n\n<p>\ud83d\udc49 If you\u2019re day trading for short-term profit and become liable for income tax, the threshold is \u00a312,570 before you have to pay. This is your personal allowance.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-nude m-align-left\">\n    <div class=\"b-block-body\">\n        <h2>Some words from our partner, Koinly \ud83d\udca1<\/h2>\n<h3><span style=\"font-weight: 400;\">Track, harvest and offset your unrealised losses<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Capital losses aren&#8217;t all bad news. You can offset them against your capital gains to reduce your overall tax liability, which includes using them to bring you back within your tax-free CGT allowance. Better still, if you\u2019ve only got losses, you can carry them forward to offset against gains in future financial years, provided you register them with HMRC.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many UK investors use a crypto portfolio tracker (like Koinly!) to track their unrealised losses &#8211; that is crypto in their portfolio that is underperforming, but not yet sold, swapped or spent &#8211; and harvest them to realise their loss and offset them against their gains. This is known as tax loss harvesting.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can use Koinly to track both your realised and unrealised gains and losses on both a portfolio and individual asset level, allowing you to optimise your tax position ahead of the end of the financial year and pay less tax.<\/span><\/p>\n<p><a href=\"https:\/\/app.koinly.io\/signup?utm_source=taxscouts.com&amp;utm_medium=advertorial&amp;utm_campaign=tax+guide\">Sign up<\/a> free today to optimise your tax liability.<\/p>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h3 class=\"wp-block-heading\">Transfer to your significant other \ud83e\uddd1\u200d\ud83e\udd1d\u200d\ud83e\uddd1<\/h3>\n\n\n\n<p>Coupled up? Great! Because this is one way to avoid paying capital gains tax on crypto. Yep, you read that right! You can give your spouse crypto without having to pay tax on the profit.&nbsp;<\/p>\n\n\n\n<p>However, there is one condition:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You must live together \ud83c\udfe0<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Take advantage of the Trading Allowance<\/h3>\n\n\n\n<p>Crypto peeps \ud83e\udd1d landlords = being able to claim a \u00a31,000 allowance.<\/p>\n\n\n\n<p>The <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/trading-allowance\/\" target=\"_blank\" rel=\"noreferrer noopener\">Trading Allowance<\/a> means you can earn up to \u00a31,000 from self-employment without having to pay tax on it. And if you have rental income as well as crypto income, you\u2019ll be able to claim both, making your total tax-free allowance \u00a32,000. \ud83e\udd29<\/p>\n\n\n\n<p>The best part? There\u2019s no long, tedious process to claim this allowance. You\u2019re not required to report your income to HMRC if it\u2019s under the threshold. That\u2019s it. \ud83d\udd7a<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Considering investing in a small business?<\/h3>\n\n\n\n<p>If you\u2019ve raked in some extra cash from crypto, and you\u2019re thinking about investing in a small business, here are some of the tax reliefs you may be entitled to:<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-blue m-align-left\">\n    <div class=\"b-block-body\">\n        <ul>\n<li><a href=\"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/what-is-seis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Seed Enterprise Investment Scheme<\/a> (SEIS): 50% income tax relief<\/li>\n<li><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/enterprise-incentive-scheme-eis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Enterprise Investment Scheme<\/a> (EIS): 30% income tax relief<\/li>\n<li><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/social-investment-tax-relief-sitr\/\" target=\"_blank\" rel=\"noreferrer noopener\">Social Investment Tax Relief<\/a> (SITR): 100% capital gains tax relief<\/li>\n<\/ul>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<p>Don&#8217;t forget: no investment is without any risk. Be sure to do as much research as possible and get financial advice if required.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Donate your crypto \ud83c\udf97\ufe0f&nbsp;<\/h3>\n\n\n\n<p>Donating to charity is never a bad idea.<\/p>\n\n\n\n<p>So if you\u2019ve made extra profit from crypto,donating crypto to a registered charity means you can either lower your CGT bill or you won\u2019t be liable for capital gains tax altogether.<\/p>\n\n\n\n<p>Again, there are a few requirements:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The person donating mustn\u2019t receive any profit or money when donating<\/li>\n\n\n\n<li>The person donating mustn&#8217;t be linked to the charity (so donating all of your crypto to your own charity isn\u2019t an option\u2026)<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Pay crypto into your pension<\/h3>\n\n\n\n<p>If you\u2019re paid fully or partially in crypto, you\u2019ll have to pay <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/income-tax\/\" target=\"_blank\" rel=\"noreferrer noopener\">income tax<\/a> depending on how much you earn.&nbsp;<\/p>\n\n\n\n<p>Check with your employer and pension provider if you can pay some of your crypto into your pension instead of your bank account. Paying into your pension can act as a great tax relief. Read more on this topic <a href=\"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/private-pension-tax-relief\/\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.<\/p>\n\n\n\n<p>It can also push you one step closer to the retirement you\u2019ve always dreamed of! \ud83e\udd38<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-cta-mini m-purple m-align-left\">\n    \n    <div class=\"b-cta-mini__content\">\n\n        \n        <h2 class=\"b-cta-mini__title\">Filing a crypto tax return?<\/h2>\n\n        \n        \n        <div class=\"b-cta-mini__body\">\n            <div class=\"b-block-body\"><p><span style=\"font-weight: 400;\">Well, listen up. We teamed up with Koinly to bring you a quick and easy solution: a tool to create crypto tax reports. Want to get your crypto tax report generated and tax return filed all in one? Look no further. Up to 1000 transactions totally free!<\/span><\/p>\n<\/div>\n        <\/div>\n\n        \n        \n        <div class=\"b-cta-mini__action\">\n\n            <a href=\"https:\/\/taxfix.com\/en-uk\/blog\/intro-to-taxscouts-koinly\/\" class=\"c-button m-large  m-mobile-fullwidth\">Learn more<\/a>\n\n\n        <\/div>\n\n        \n    <\/div>\n<\/div> <!-- .b-cta-mini -->\n\n<div class=\"c-body\">\n\n","protected":false},"excerpt":{"rendered":"<p>Let\u2019s talk crypto! It\u2019s cool, it\u2019s innovative, and it\u2019s one of the few things that isn\u2019t fully-regulated by the government. But does that mean you can avoid paying the tax you owe? Uh-uh. \ud83d\ude45 In the UK, crypto is very much subject to tax. And if you owe it, you can\u2019t avoid paying it! But [&hellip;]<\/p>\n","protected":false},"author":30,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[461,458],"tags":[70,419,418],"class_list":["post-22151","post","type-post","status-publish","format-standard","hentry","category-crypto","category-investor-capital-gains-tax-returns","tag-capital-gains-tax","tag-crypto","tag-invest"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to avoid paying tax on cryptocurrency &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"If you owe crypto tax, you can\u2019t avoid paying it - but there are a few ways you can navigate the dreaded \u2018crypto-tax\u2019. 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