Crypto and the year end

Talk to our team

04 April 2024

Services:

Personal Tax Planning,

Wealth planning & Private client,

International Tax Planning

Crypto and the year end

We are seeing a lot more activity with cryptocurrency queries now that the prices are increasing again. These range from are they taxed somehow to what happens if I buy derivatives?

One of the commonest at this time of year, as people turn their eyes to the year end and consider taking profits is 'can I use my losses'?

The price of bitcoin (and many other cryptocurrencies) was much higher around two years ago, and many people may have sold crypto acquired in happier times when it was worth more during 2022/23, and have made losses as a result. Generally, disposals of crypto are seen to give rise to gains or losses for capital gains tax purposes, and in good news, any losses arising in the year not offset against in-year gains can be carried forward to set against future gains. So, anyone with gains now who have any leftover losses to carry forward can utilise them.

Those who have unfortunately lost access to their crypto, such as in the collapse of SFX or who are unable to access their wallets because thy have lost the hard drives or the passwords can make negligible value claims for such lost assets; however, the amount that can be claimed is only the amount paid for the crypto in the first place, not the current value of the crypto.

Finally, for those thinking about taking some of their gains, do you know how disposals are matched to acquisitions? It's not as simple as you may think. If you sell and buy back the same day, those transactions are matched first, not the oldest ones. Then it is all acquisitions in the last 30 days matched, and then all other are matched on an average basis. So when you sell, you are not selling the oldest first, and this can have quite an impact on what you think you have sold for tax purposes.