Capital Gains Tax Changes for UK Residents

Reduced Capital Gains Tax Allowance

As of 6 April 2023, the capital gains tax (CGT) allowance for UK residents will be reduced from £12,300 to £6,000. This allowance will be further reduced to £3,000 in April 2024.

CGT is a tax on profits from the sale of assets, such as property, shares, and cryptoassets. The CGT allowance is the amount of profit you can make before you start paying tax.

HMRC Urges Caution with Cryptoassets

With the growing use of cryptoassets, Her Majesty's Revenue and Customs (HMRC) is urging people to avoid tax avoidance schemes involving cryptoassets.

HMRC has stated that it is "committed to ensuring that everyone pays the right amount of tax" and that it will be "taking action against those who seek to avoid or evade their tax obligations."

Crypto Profits and Tax-Free Allowance

Everyone in the UK has a Capital Gains tax-free allowance of £12,300. So if your crypto profits are below this amount, you won't have to pay any CGT.

However, if your crypto profits exceed £12,300, you will have to pay CGT on the amount of profit that exceeds the allowance. The CGT rate for individuals is 20% for basic-rate taxpayers and 28% for higher-rate taxpayers.

Tax Guidance for Crypto

For individuals as opposed to businesses, the UK Tax guidance for crypto is split between capital gains tax and income tax.

Capital gains tax applies to profits from the sale of cryptoassets, while income tax applies to profits from crypto mining and staking. HMRC has published detailed guidance on how cryptoassets are taxed in the UK.