Tax year 2020 + extra questions

Tax Questions
#1

Hi everyone! My question is, if I started to do crypto transfers in September 2020, I obviously need to buy the tax plan 2020, then when should I need to contact HMRC first? I know I need to do the capital gains form, but when, and is it easy to fill out with my Koinly report? Do I need to anything else with them like any registration etc? If yes, when?

Also it’s another topic, please can anyone explain how I need to sign these transactions (rewards or income (for HMRC))?
-Coinbase rewards, when you get something after quizzes.
-Crypto.com card cash-back.
-Staking rewards.
-Binance friend referral transactions (600+ transactions what all together worth less then £2 :roll_eyes::rage:)

Thank you very much! I really appreciate your help!!!

#2

Your tax return for 2020/21 will be due 31 Jan 2022. You can register for self assessment now. It takes a while to get codes through the post, so don’t delay registering. The form will be available from the new tax year in early April 2021 and you can submit it any time before January.

Two useful guides are the HMRC’s at Cryptoassets: tax for individuals - GOV.UK and the Koinly one at https://koinly.io/guides/hmrc-cryptocurrency-tax-guide/

Personally I would tag all your examples as rewards rather than income but there are lots of grey areas in crypto tax so you will need to DYOR, or speak to an accountant or HMRC’s helpline to be sure.

#3

Thanks Europa! I’ve already seen you in some post you are really nice and helpful!
Does that self assessment registration mean I’m gonna be self employed from that point? I tried to read infos about it but I’m still confused… thank you!

#4

No, you won’t be self employed. The only purpose of the tax form is to work out what you owe - it doesn’t change your status in any way.

Basically if you have a simple tax situation (i.e. your only income is from your job) then PAYE through your payslip is enough and you don’t need to complete a tax return. If you have a more complicated situation (e.g. you’re a landlord or you have capital gains through crypto etc, or you have paid too much tax and need a refund) then you need complete a tax return via self assessment. If you end up owing extra you will need to make a payment after submitting it.

As it’s your first year I would advise you to start early as there are lots of new concepts to get your head around, but as long as you give yourself time it’s not too hard.

#5

Yes I understand, I try my best! My last question is with this 12,300 tax free amount. Is it counted with my wages am I right? Thank you

#6

No the 12,300 is just for your capital gains and is on top of your income tax personal allowance. So if your crypto gains are less than 12,300 AND your total transaction volume is less than a certain amount (I can’t remember what it is) then you don’t need to do a tax return, but the onus is always on you to ensure you pay the right amount of tax.

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#7

Ive just tried to look into something…

“You do not have to pay tax if your total taxable gains are under your Capital Gains Tax allowance.

You still need to report your gains in your tax return if both of the following apply:

  • the total amount you sold the assets for was more than 4 times your allowance
  • you’re registered for Self Assessment”

The first one: does it mean for example if there is 1 transaction (from 1000) where I bought a coin for £1 pound and I sold it for £8 then I need to report? It would sound weird for me… thanks!

#8

No this is the total volume thing I was talking about. So it applies if all your disposals between 6/4/20 and 5/4/21 add up total more than £49,200 (= 4 x 12,300). This will include fees, crypto-to-crypto transfers etc.

So if you bought 1 BTC for £50,000 and then sold it for £50,001 you would need to declare a capital gain of £1, even though your gain was less than the £12,300 gain allowance.

It would be helpful to UK users if Koinly showed this figure but I don’t see it anywhere.

The second point is interesting - if you register for self assessment you’re committed to filing regardless of whether your gains are over the threshold or not.

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#9

Thank you! As I understand if I invested £5k, my CG is £10k then I don’t need to do anything, if I didn’t register for self assessment.

#10

That’s my understanding. But you don’t mention your transaction volume in your example - you need to work this out too, and check it is not over 49,200 volume.

For example if you bought £5K of A, swapped it to B when it was worth £6K, converted it to C when it was worth £7K then sold it for £10K, then your transaction volume would be 5+6+7+10 = £28K.

Or, if you were trading you could easily get over £49,200 volume but still only have a CG of £10K on an initial £5K investment.

All this is just my understanding, not tax advice. Good luck!

#11

I understand what you are saying but how can I find out that? Can Koinly make that calculation? :sob:

#12

Can I work it out if I see all TRADE transactions in Koinly then add all of them together in GBP? If I do that its around £16k together. Like:
Exchange ETH with GBP / £250
Exchange BTC with ADA / £135
Exchange ALGO with GBP / £500
Exchange DOT with ALGO / £300

So basically everything in TRADE were added together in GBP then Ive got £16k.

#13

I just noticed the word “both” in

You still need to report your gains in your tax return if both of the following apply:

  • the total amount you sold the assets for was more than 4 times your allowance
  • you’re registered for Self Assessment”

I originally read it as “either”. So that would suggest that if your gains are below the limit, and you’re not registered for self assessment, then you don’t need to do anything more.

Anyway, to answer your question, if you click on a transaction to open the more details panel, then click “Details” there is a “fiat value”. What I would do is add up the fiat values of all the Sell and Exchange transactions.

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#15

Thanks for all your help Europa it looks like 16k trades and 1k withdraws… now I noticed as well its so tricky I read it million times and you are telling me now :rofl::rofl:

#14

It’s best to use Koinly to list your transactions and form a report and then use an accountant to file the tax. There is no point in breaking your head over these things…The accountant will charge you not more than £450…I am going crazy myself. My staking rewards somehow don’t feature on the Koinly report and there are errors in calculations involving cryptos transferred from different exchanges.

1 Like
#16

Thank you VRAO! Will see!

#17

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