Settlement of tax on profit from cryptocurrencies

Comprehensive accounting services for cryptocurrency trading: consultations, tax registration and settlement, tax optimization, training on the basics of the cryptocurrency market. Settlement of tax on investment profit according to the principles of Capital Gain Tax and Income Tax for Self Employed and Limited companies.

Cryptocurrency accounting settlement

👉 Tax consultations – we will give you a clear interpretation of whether in your case you need to settle your cryptocurrency profits and on what terms (Capital Gain Tax or Income Tax)
👉 Registration and tax settlement on the basis of Capital Gain Tax and Income Tax
👉 Tax optimization of cryptocurrency trading
👉 Configuration of „tracking” programs for transaction counting
👉 Professional training on the basics of the cryptocurrency market – individual and group

„Maciej is a high-class accountant with amazing knowledge of accounting, especially cryptocurrency accounting. I have talked to many cryptocurrency accountants, but none of them was as overwhelmed as Maciej from Optima Creative Ltd. I RECOMMEND HIGHLY.”

Waldemar Wolak

Legal provisions regarding tax settlements on cryptocurrency trading

HMRC, i.e. the British Tax Office, on December 19, 2018, established the preliminary regulations regarding the settlement of the tax on cryptocurrency trading, while HMRC does not call it Kryptowaluty Crypto Curriencies but Crypto Assets, i.e. cryptographic assets.

Prior to December 2018, HMRC treated cryptocurrencies as gambling and was tax exempt. On March 30, 2021, the final version of the tax regulations was released, which you can find on the government website: Cryptocurrency Trading Tax Settlement. The regulations were also supplemented on November 22, 2021.

Tax obligation (Tax Event), the so-called Disposal, i.e. the sale of an asset, occurs in situations if:

  • You are selling / exchanging cryptocurrencies for pounds
  • You trade crypto to crypto or to stablecoin (USDT) *
  • You pay by cryptocurrencie for items or services, e.g. for accounting services
  • You transfer the crypto to a friend, sister or mother, unless it is your spouse, then such an operation is treated as a donation.

From the sum of sales, we deduct the sum of investments and everything that remains, i.e. our profit, the so-called

* Stablecoin (USDT) – what is it?

Stablecoin is simply a different variety of cryptocurrencies that provide price stability through the backing of reserve assets, usually a stable fiat currency such as the US Dollar. When it comes to HMRC, stablecoins like Tether are treated exactly the same as any other cryptocurrency, and therefore taxation is the same as for cryptocurrency-to-cryptocurrency transactions.

The topic of settling the tax on profit from trading in cryptocurrencies is new and quite complicated, and the interpretations of officials are not clear. Many accounting offices refuse to perform this type of settlement or consultation.

Each case is different, so before the settlement, make an appointment with us for individual tax consultations on cryptocurrency settlements. You will learn whether you have to settle your cryptocurrency profit at all and on what tax rules. We will advise you on the best solution, make a preliminary calculation and calculate how much tax is due.

Two types of tax settlements on cryptocurrency trading – Capital Gain Tax or Income Tax?

The principles of tax settlement differ from each other in the nature of the business. Others are for individual investors and others for Self Employed businesses or Limited Companies. The system in which we settle accounts depends only on the interpretation of the taxpayer who knows the provisions of tax law.

Whether it is in the case of Capital Gain Tax or Income Tax, according to HMRC, you must have all the documentation on a paper or digital medium, for example on a USB flash drive, hard drive or in the cloud – see the Documents section.

1. Tax settlement for individuals according to the Capital Gain Tax rules

Capital Gain Tax, i.e. capital gains tax, which we do in the Self Assessment system, mainly applies to full-time or Self Employed people whose main earning activity is NOT Crypto trading.

To be billed in this system, you need a correct registration with HMRC and a UTR number. Of course, as an accounting office, we help with such registration.

There are three Capital Gain Tax rates for individual investors:

  • £ 0 – £ 12300. 0% – this is a tax-free amount, independent of the Income Tax Free Allowance.
  • £ 12,301 – £ 50,000. 10% tax as a Lower Income Band
  • over £ 50001. 20% as Higher Income Band

At the same time, the Lower Income and Higher Income Band include the entire taxpayer’s income, e.g. from P60, profit from Self Employed or dividends.

If your gain, i.e. profit in a given tax year, exceeded the sum of £ 12,300, then according to HMRC your duty is to settle accounts and pay the tax due, even if you have not „left” to FIAT, i.e. a traditional fiat currency such as GBP, PLN, USD or EUR.

If your profit did NOT exceed £ 12,300 in a given tax year, you are not required to settle accounts!

However, if in the next tax year you exceed the exempt amount, the previous years have to be accounted back separately anyway. If, for example, you were a Self Employed or a director in a company or you sold a property and additionally earned on cryptocurrencies, you need to make an amendment, i.e. a correction to the settlements already made. In our humble opinion, it is a good practice to settle equity investments on an ongoing basis, every year, even if the profit was below the free amount. Then order will be maintained and there will be consistency in transferring losses to the next tax years. It is also easier to recall a year than 4 years.

If you bought for pounds, e.g. BTC, ETH, ADA, DOGE, Polka DOT, and you decided to be HODL’er, i.e. a long-term investor, and you did not sell your assets for pounds or any other cryptocurrency, then you do not have to account for it or pay tax. You only settle accounts when selling crypto to another crypto, StableCoin or Fiat. The exception is if the total sales revenue is 4 x the tax-free amount, i.e. £ 49,200, then you are required to settle even if you have not earned any income.

However, the very issue of exchanging one crypto for another is controversial, which according to HMRC is also a taxable event, the so-called Tax Event. This means that you are basically getting rid of the assets and acquiring others. The market value of the crypto received is taken as the selling price for this transaction. If this crypto cannot be valued for some reason (e.g. ICO tokens), you can use the market value of the crypto sold.


Suppose I bought 0.1 Bitcoin in July 2021 for £ 2,000. In November 2021, I exchanged 0.1 Bitcoin for 2 Ethereum. At the time, the market value of 2 ETH was around £ 7,000. Basically this means £ 7,000 is my sales revenue and £ 2,000 is the cost base, so my total capital gains would be £ 5,000 taxable in this case.

It should be remembered that the final settlement includes all transactions from the entire tax year, i.e. from April 6 to April 5, and the time for the settlement of profits for e.g. the tax year 2020/2021 is 01/01/2022


It is also worth noting that in the case of CGT it is NOT possible to settle costs such as office, fuel, internet, telephone, accounting, training, laptop purchase, transaction costs or accounting services. We also do not include profits from staking, airdrops or mining for settlement in the CGT system.

2. Income Tax for Self Employed or Limited

Income Tax settlement should be made if, for example:

  • You earn regular income on the stock market as a Day Trader and this is your main business, you have no other gainful job
  • You receive remuneration for work or services or you dig crypto, the so-called mining, or trading graphics cards, or doing staking, or getting airdrops
  • Assuming your profit in a given tax year is over £ 1000.

Income Tax thresholds:

  • £ 0 – £ 12,500 – tax-free amount (income minus tax deductible costs)
  • £ 12,501 – £ 50,000 – 20%
  • £ 50001 – £ 150,000 – 40%
  • over £ 150001 – 45%

The tax settlement deadlines are the same as for Capital Gain Tax.

According to the Income Tax system, you can settle tax-deductible costs such as office, fuel, internet, telephone, accounting, training, laptop purchase, machinery purchase or transaction costs.

In the case of high profits, e.g. above 20k pounds a year and high operating costs, according to our interpretation, it is more financially advantageous for such a client to settle with the help of a Limited company, where the tax on profits is constant and amounts to 19%. Such a tax is to be maintained until 1.4.2023.

What documents do I need to settle with HMRC?

The documentation includes: history of all transactions from exchanges in a csv file, accurate tracking of the flow of funds, report from the program, e.g. Koinly, bank account statements, wallet addresses, CSV files, Excel table, invoices for the purchase of machines or graphic cards, etc.

HMRC requires you to calculate all transactions from a given fiscal year to the pound and cryptocurrency exchanges will not do it for us. We are aware of the difficulty of settling all transactions from different exchanges and portfolios. As far as we are talking about a few transactions, the matter is simple because it can be converted in an Excel table, but when it comes to 500 or even 5000 transactions per year, manual calculation is too time-consuming, and the cost of such a service could often exceed the investor’s profits.

Koinly as an example of a software accepted by HMRC to count the profit on cryptocurrency trading

To save our clients’ time and money, we use the Koinly program, but there are also others on the market, such as Recap. These programs count all transactions up to the pound at the rate at the time of purchase or sale. Our customers and I also use Koinly. It is online software, very easy to use and, most importantly, has efficient support. Based on the connected exchanges and wallet addresses, this program is able to generate an accurate report for each tax year that is accepted by HMRC. The program also calculates the so-called Poole, Bed and Breakfast or the 30-day rule. First of all, this program catches all the holes in crypto trading, which can later be easily filled with a short note so that the clerk checking the settlement, in the event of an inspection, asks as few difficult questions as possible.

You can set up an account on Koinly for free, connect exchanges and wallets and the program will calculate the approximate profit for taxation, it will also show holes, i.e. gaps in transactions that can be easily supplemented with a note.

For generating an annual report accepted by HMRC you have to pay a fee: up to 100 transactions – $ 49, up to 1000 transactions – $ 99, up to 3000 – 179 $, above 10,000 – 279 $.

$ 20 for registering with Coinly from the link below

You can register yourself or use the reference link, thanks to which you will receive a $ 20 discount and we will also receive a $ 20 discount, for which we will help you configure the program properly so that it does not count unnecessary things.

Crypto event in Barnsley 22.01.2022

Optima Creative as an expert in the area of tax settlements on cryptocurrency

The second event in the UK in the topic of cryptocurrencies. Master organization. 130 people in the audience. A huge amount of knowledge. Top speakers and sponsors. Great people with passion. Delicious catering. Networking until dawn.

Event website:

Slawomir Zawadzki (Kanga Exchange), Maciej Hussakowski (Optima Creative Ltd – Krypto Taxes), Pawel Krzek (Crypto Mining), Piotr Marzec Liroy and Maciej Sag (Hub Bur Ger), Phil Konieczny, Piotr Ostapowicz, Jakub Gajewski (basics of Krypto), Marcin Matla (Metaverse, Lounchpady, NFT), Mariusz Fultyn.

Dowbusz Properties (Dawid Dowbusz), Kanga Exchange (Slawomir Zawadzki), Lexus Sheffield, Koda Cryptocurrency, Meg School, Webturo, Rafal Pikul

Joanna Ptasinska, Marcin Matla, Slawomir Bednarek, Mariusz Fultyn, Jakub Gajewski, Szymon Olszycki, Jacek Suszka (Passion Food Restaurant)

Patryk Chapinski

The cost of the first consultation is £ 75.00 for a half-hour interview.
The cost of the settlement depends on many factors that we discuss during the consultation.
A sample price list can be found in the Price List tab.
Make an appointment today: by phone, e-mail or via the contact form.

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