Capital Gains
Capital gains tax is due whenever you “dispose” of an asset that has increased in value. All gains will be declared on your self-assessment, however if you sell a residential property in the UK you must report and pay your capital gains tax within 60 days of the completion date. As the capital gains tax rate changes depending on the level of your earnings, being aware of your financial situation for the tax year is crucial when working out your tax bill. Estimating your earnings incorrectly can lead to an unexpected tax bill at the end of the year.
The invention of cryptoassets and widespread ownership of online currency left HMRC in the dust. Unfortunately, tax law is finally catching up to the digital age. This can lead to problems with non-compliance of tax laws for crypto-owners. As proactive accountants we identified this gap in legislation years ago and have been closely monitoring HMRC’s updates and guidance. We can advise on all things capital gains but if you would like to discuss your current cryptocurrency position we will be happy to help.
Capital Gains FAQ's
WHAT DOES "DISPOSE" OF AN ASSET MEAN?
Disposing of an asset includes selling it, giving it away as a gift, swapping it for something else or getting compensation for it – like an insurance payout.
HOW MUCH CAPITAL GAINS TAX DO I PAY?
The main rates are 18% for basic rate tax payers and 24% for higher rate tax payers.
DO I PAY CAPITAL GAINS TAX WHEN I SELL MY HOME?
You usually don’t pay capital gains tax on your main residence. However, there may be a circumstance where you will. Give us a call to make sure.
WHAT IF I GIVE AN ASSET TO MY PARTNER?
You don’t pay capital gains tax on assets you give or sell to your husband, wife or civil partner.
WHAT RECORDS DO I NEED TO KEEP?
You need to keep documents that show the amount you paid for the asset, any additional costs related to the purchase or sale of the asset, and the amount you received when you sold the asset.
WHAT IF I MADE A LOSS?
You should report losses to HMRC as well. This will allow you to offset this loss against any future gains made. You may be able to carry back a capital gains loss to the previous year as well.
WHAT ARE THE PENALTIES FOR FILING LATE?
The penalties for late filing are the same as for self-assessment. You will receive an initial £100 penalty.
DO I PAY CAPITAL GAINS ON CRYPTOASSETS?
You might need to pay capital gains tax when you sell or exchange your tokens for a different type of cryptoasset, use your tokens to pay for goods and services, or give away your tokens to another person.
DO I NEED TO REPORT MY CRYPTOCURRENCY GAINS?
Unfortunately yes. Despite the decentralised nature of cryptocurrency, governments will always want a slice of your earnings. Your gains should be reported on your self-assessment.