Updated Tax Guidance on Cryptocurrency Transactions

At the beginning of August, HM Revenue & Customs contacted a number of cryptocurrency exchanges for details of their customers. This follows similar moves by tax authorities in other countries to ensure that cryptocurrencies are taxed in the same way as comparable assets such as stocks and shares.

Gains made on the sale of cryptocurrencies are subject to tax but the anonymity of cryptocurrency trading makes it difficult for HM Revenue & Customs to identify tax liabilities. However, existing legislation gives HM Revenue & Customs the power to gather data from a number of sources and it is now likely that that they will be able to identify anyone who has not declared relevant gains on their Self-Assessment Tax Return.

In December 2018, HM Revenue & Customs updated it guidance on the tax treatment of cryptocurrency transactions, confirming that in most cases gains will be subject to Capital Gains Tax and that losses can be offset against gains. In exceptional cases, where transactions are very frequent and a significant level of organisation and sophistication is involved, profits will be treated as trading income and subject to income tax.

A running total of transactions (known as a “pool”) must be kept for each cryptocurrency, in the same way as assets such as shares.

HMRC’s guidance sets out the following information that needs to be maintained for each transaction:

  • Type of cryptocurrency
  • Date of transaction
  • Whether bought or sold
  • Number of units
  • Value of transaction in sterling
  • Cumulative total of investment units held
  • Bank statements and wallet addresses


Details of all relevant cryptocurrency transactions for the year ended 5 April 2019 need to be reported by 31 January 2020. Anyone with undeclared gains and losses for previous tax years may need to make a disclosure and should consult a suitably experienced adviser such as Wilton as soon as possible.

Speak with a member of the tax team today: taxationservices@wiltongroup.com