How to Pay Bitcoin and Other Cryptocurrency Taxes in the UK

You’ve held, sold, and traded cryptos in the UK. You’re done combing through your records, consolidating your transactions on a crypto tax tool, and computed for your taxes with a tax expert. You’re ready to pay your dues to the HMRC, but how do you do exactly that?

In this short post, we’ll walk you through the process of reporting and paying your cryptocurrency taxes to the UK. You’ll also learn some tips to simplify your tax computations for a worry-free and smooth HMRC transaction.

Keeping Your Transactions In Check

The first thing to do in preparing your crypto taxes is to consolidate all your transactions and data from all exchanges, wallets, and crypto platforms you’ve used. It would be best if you did this for every cryptoasset you’ve had before and now. For instance, you hold and transact using Bitcoins, Ethereum, Litecoin, and Ripple. You need to consolidate your data for each of these four different cryptocurrencies. Be extra-mindful of the tax year you’re in as you go through your transaction dates.

It’ll be much easier to collect and analyse your cryptocurrency transactions if you’re simply a crypto hobbyist with a few transactions to overlook. But suppose you’re a hardcore enthusiast or a large-volume crypto trader. In that case, chances are it’ll be harder to track every single trade and transaction done using all your cryptos. 

In this case, you can use a crypto tax tool such as ACCOINTING.com to collect all your data. ACCOINTING.com allows you to review, edit, and label transactions and automatically generate tax reports based on HMRC’s guidelines.

Reporting Your Cryptocurrency Transactions

You have two options for reporting your crypto taxes, namely:

Suppose you used the real-time Capital Gains Tax Service, but you need to send tax returns for another reason. You must report your gains once more by filling up the Self Assessment Tax Return. Find other reasons for filing a tax return here.

Whichever way you choose to report your gains, you must log in to Government Gateway using your credentials. This is required to prove your identity. You can also sign in using GOV.UK Verify or through a digital ID scheme from a participating European country.

A Unique Taxpayer Reference (UTR) number is needed to complete your tax filing online. The HMRC issues this number after you register for a Self Assessment tax return. You can find the UTR on your HMRC account on their website, as well as on different documents from the HMRC such as SA250, Statement of Account, payment reminders, notice to file a tax return, and on old self-assessment tax returns.

No UTR? You can file your tax returns through commercial tax software. You can also manually file by downloading, printing, and filling up the self-assessment forms and helpsheets here.

When Should You Report to the HMRC?

UK’s tax year starts from 6th April and ends on 5th April of the following year. The most recent tax year was from 6th April 2019 to 5th April 2020.

Electronic online tax return filing has a deadline until 31st of January of the following year, by midnight. Meanwhile, paper tax returns must be submitted by midnight of 31 October.

Paying Your Dues to the HMRC

Once you’ve successfully filed your tax return declarations, HMRC will email you or send a letter with detailed instructions on how to pay. A payment reference number is also included in the correspondence.

HMRC will inform you of the total amount you need to pay, depending on your income tax rate. You’ll be liable for penalties if your tax return is late, you missed the deadline for payments, or you sent an inaccurate.

Summing It Up

Crypto holders in the UK can seamlessly file their tax returns and pay for them through the HMRC website on GOV.UK. You can easily consolidate your gains through online tax tools like ACCOINTING.com. However, you can also seek guidance from accountants and crypto tax experts. Paying your bitcoin and other cryptocurrency taxes to HMRC has never been this easy, straightforward, and convenient.