Capital Gains Tax (CGT)
Capital Gains Tax is a tax on the profit when you sell (or 'dispose of') something that's increased in value. It's the gain, not the total amount received, that's taxed.
What is CGT?
CGT is charged on most assets, including property, shares, and cryptocurrency. The tax is paid on the difference between what you paid for the asset and what you sold it for.
CGT Rates 2023/24
| Income Tax Band | CGT Rate |
|---|---|
| Basic rate taxpayer | 10% or 18% |
| Higher or additional rate taxpayer | 20% or 28% |
Annual Exempt Amount
You have an annual CGT exemption of £12,300 for 2023/24. This means you only pay CGT on gains above this amount.
CGT and Cryptocurrency
HMRC treats cryptocurrency as a chargeable asset for CGT purposes. This means:
- Buying and selling crypto creates a CGT liability
- Trading crypto for goods or services is a disposal
- Spending crypto counts as a disposal at market value
- Gifting crypto may trigger CGT
Calculating CGT on Crypto
To calculate CGT on crypto disposals:
- Calculate the total proceeds from the disposal
- Subtract allowable costs (purchase price, fees)
- Apply any reliefs or exemptions
- Calculate the tax due at your marginal rate
Record Keeping
You must keep records of all crypto transactions for at least 5 years after the tax return deadline. This includes:
- Dates of acquisition and disposal
- Amounts paid and received
- Exchange rates used
- Any fees or charges
Reporting CGT
CGT on crypto is reported through Self Assessment. Include all disposals in box 3 of the CGT pages in your tax return.
For more detailed guidance, visit the official HMRC website.