Cashing Out Cryptocurrency Taxes

Cryptocurrency in the UK: Tax Implications

Capital Gains Allowances

Starting from the tax year 2023/24, individuals in the UK will only receive a capital gains allowance of £3,000 per year for cryptoassets. This means that any profit made from selling cryptocurrencies over this amount will be subject to capital gains tax, which can range from 10% to 20% depending on your income tax bracket.

Income Tax

If you earn income from cryptocurrencies, such as through mining or staking, this will be subject to income tax. The rate of tax you pay will depend on your other sources of income, and can range from 20% to 45%.

Unpaid Tax

If you have previously cashed out cryptocurrencies and failed to pay the correct amount of tax, HM Revenue and Customs (HMRC) may be able to collect the unpaid tax from you. You should contact HMRC as soon as possible to discuss your options and avoid potential penalties.

HMRC's Urgency

With the growing use of cryptoassets, HMRC is urging individuals to be aware of their tax obligations. They have issued guidance and set up a dedicated hotline for crypto-related tax enquiries. It is important to stay informed and seek professional advice if you are unsure about your tax liabilities.

Consequences of Non-Compliance

Failing to comply with your tax obligations can have serious consequences, including:

• Fines
• Interest on unpaid tax
• Criminal prosecution

Conclusion

Understanding the tax implications of cryptocurrencies is crucial for individuals in the UK. By being aware of the capital gains allowances, income tax rates, and HMRC's urgency in this area, you can ensure that you are fulfilling your tax obligations and avoiding potential penalties.