Holders of cryptoassets (also known as cryptocurrency) have recently been reminded in a letter from HMRC of their legal responsibilities.

It has been warned that holders of cryptoassets who dispose of them, may be required to pay Capital Gains Tax (CGT).

The disposal of cryptoassets happens when you:

• Exchange one cryptoasset for another. E.g. if you exchange Bitcoin to Ether
• Sell cryptoassets for fiat currency E.g. £ or $
• Use cryptoassets to buy goods or services

The gains on selling cryptoassets are taxable, as are the gains on exchanging cryptoassets.

Gains are the difference between what you initially paid for an asset and what you sold it for or the final value at point of exchange.

According to the letter, you are required to pay CGT if your total gains accrued from all disposals within a tax year are over the annual exempt amount, which is currently £12,300.

Holders of cryptoassets have been advised by HMRC to review their transactions to calculate any losses or gains and to complete a Self-Assessment Tax Return if needed.

Visit the dedicated government website page to check if you need to pay tax on your cryptoassets.

If you’d like further advice or support, get in touch with our experts at hello@bkplus.co.uk