Cryptocurrency (also known as crypto) is a form of decentralised digital currency. It only exists online and there are now over 1500 different cryptocurrencies in existence. They are governed independently of any bank or government, which is the main difference between crypto and traditional currencies.
If you earn cryptocurrencies through mining, this counts as income from self-employment.
On earnings over £1,000 from self-employment, you might need to pay Income Tax and National Insurance on the value of the mined crypto (calculated in GBP); however, it’s possible to expense mining costs. This can be your computer, electricity, bookkeeping etc., but only if cryptocurrency trading is your business as opposed to a hobby.
If you make a profit from selling cryptocurrencies (e.g. on an exchange), you need to pay Capital Gains Tax on any profit over £3,000. If you make a loss, you can carry this loss forward and claim it next year.
No. Whereas online cash such as a Paypal balance can be withdrawn and spent on anything without any kind of conversion, crypto is decentralised. One common cryptocurrency is Bitcoin
It’s simple – you just complete a Self-Assessment tax return detailing your earnings for the tax year in the same way as you would for typical cash earnings.