Cryptocurrency Accountants
at Ultra Tax Ltd
Navigating cryptocurrency tax regulations can be complex, but at Ultra Tax Ltd, we make it simple. Whether you’re trading Bitcoin, Ethereum, or other digital assets, it’s essential to ensure you’re complying with HMRC’s rules. From Capital Gains Tax on crypto investments to Income Tax on earnings from mining or staking, our expert accountants help you file accurate and timely crypto tax returns. Don’t let the confusion of crypto taxation hold you back—let Ultra Tax Ltd take care of your crypto tax returns, ensuring you're fully compliant while maximising any potential tax savings.
What is Cryptocurrency?
Cryptocurrency, often referred to as ‘Money 2.0’, is a digital form of currency that operates outside traditional financial systems. Unlike standard currencies like GBP, cryptocurrencies are decentralised, meaning they aren’t controlled by a central authority like a government or bank. This decentralisation is a key factor driving the popularity of cryptocurrencies, as many view them as secure, innovative alternatives to fiat currencies.
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Popular cryptocurrencies such as Bitcoin and Ethereum frequently make headlines due to their market value, but the world of cryptocurrency is vast, with thousands of different coins and tokens, each built on unique technologies and serving specific purposes.
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Cryptocurrency, or “crypto” as it’s often called, can be used for:
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Transferring funds.
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Storing value.
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Trading electronically.
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Purchasing goods and services online.
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However, HMRC does not classify cryptocurrency as money or currency, which has significant implications when it comes to your taxes. Instead, HMRC refers to them as “crypto assets,” a term that includes not only traditional coins but also utility tokens and security tokens.
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With the rapid growth of the crypto market, individuals and businesses are increasingly investing in digital assets, often making substantial gains. At Ultra Tax Ltd, we’re here to help you navigate the complexities of crypto tax compliance and ensure your investments are handled efficiently.
How is Cryptocurrency Taxed in the UK?
The taxation of cryptocurrency depends on how it is acquired, held, and disposed of. At Ultra Tax Ltd, we help individuals and businesses understand the nuances of crypto taxation and ensure compliance with HMRC regulations.
In most cases, when cryptocurrency is held personally and then sold or exchanged, any gains made are typically subject to Capital Gains Tax (CGT). However, the crypto world is far more complex than just buying and selling.
Ways Cryptocurrency Can Be Acquired and Taxed
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Purchasing Cryptocurrency:
Gains from selling purchased crypto are generally subject to CGT. -
Mining and Staking:
Crypto acquired through mining or staking may be subject to Income Tax, even if it hasn’t been sold or exchanged. -
Other Acquisitions:
Additional methods of acquiring crypto, such as airdrops or rewards, may have specific tax implications based on HMRC’s guidelines.
What Counts as a Disposal?
One of the biggest misconceptions about crypto taxation is that it only applies when crypto is sold for traditional currency like GBP. In reality, HMRC considers any disposal of crypto assets as a taxable event, including:
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Selling crypto for fiat currency.
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Exchanging one cryptocurrency for another.
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Using crypto to purchase goods or services.
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Gifting crypto to someone else (excluding a spouse or civil partner).
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Each disposal event may incur Capital Gains Tax, but in some cases, Income Tax may apply. For instance, if HMRC determines that your crypto activities resemble trading or professional activity, such as frequent transactions or earning rewards, it may assess the gains as income.
Can My Limited Company Invest in Cryptocurrency?
Yes, a limited company can invest in cryptocurrency. However, whether it’s the most tax-efficient option depends on your circumstances and long-term financial goals. At Ultra Tax Ltd, we can help you navigate the complexities of corporate crypto investments to ensure compliance and optimise your tax position.
Key Considerations for Limited Companies Investing in Crypto
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Platform and Account Setup:
Just like with a bank account or investment platform, the account used to purchase and hold cryptocurrency must be registered in the company’s name. If the platform is in your personal name, HMRC may classify the holdings as personal assets, making them subject to personal tax instead of corporation tax. -
Director Loans:
If company funds are transferred to a personal platform to purchase crypto, HMRC may treat this as a director loan, with any resulting gains taxed through your Self-Assessment Tax Return rather than the company’s accounts. This could lead to higher tax liabilities compared to gains taxed under Corporation Tax rules. -
Tax Efficiency:
Investing through a limited company may offer advantages, but it's crucial to assess whether this aligns with your overall tax strategy. The rules around crypto investments are evolving, and expert guidance can help you stay compliant while minimising tax exposure.
Research Before Investing
At Ultra Tax Ltd, we don’t provide investment advice, but we strongly recommend conducting thorough research before making any crypto investments. Cryptocurrency markets are volatile, and ensuring the correct legal and financial setup is essential to avoid potential pitfalls.
How Ultra Tax Ltd Can Help with Cryptocurrency Tax
At Ultra Tax Ltd, we work with self-employed individuals and businesses across a variety of sectors, including those navigating the rapidly growing world of cryptocurrency. Every client’s situation is unique, which is why it’s essential to choose an accountant who understands your specific needs and tailors solutions to fit your financial goals.
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For individuals and businesses dealing with cryptocurrency, we provide expert guidance to help you navigate complex UK tax laws and optimise your tax position.
Our Crypto Tax Services
When you work with Ultra Tax Ltd, we can assist you with:
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Understanding Crypto Tax Implications: Whether personally or via a limited company, we’ll explain how HMRC views and taxes your crypto assets.
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Pooling Cryptocurrency for Capital Gains Tax: We ensure your crypto holdings are pooled correctly, as required by HMRC for capital gains calculations.
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Preparation of Self-Assessment Tax Returns: We handle your crypto gains and trading data seamlessly, ensuring compliance with tax regulations.
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Limited Company Crypto Trading: For businesses investing in or trading crypto, we provide support to manage your accounts and align them with HMRC requirements.
Why Choose Ultra Tax Ltd for Crypto Tax?
We know that dealing with cryptocurrency tax can be overwhelming. You’re busy running your day-to-day operations, and the last thing you need is to decipher complicated tax rules. Let us take care of the details while you focus on what matters most—your business and investments.
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Have questions about cryptocurrency and taxes? Contact us today at 0191 341 0142, or request a call-back, and one of our friendly experts will be happy to assist.
See how Ultra Tax Ltd can help you with your Cryptocurrency
Looking for more than just Cryptocurrency Accountants?
At Ultra Tax Ltd, we offer a range of expert accounting services, from tax rebates to bookkeeping, to ensure your financial matters are handled with precision. Discover how our comprehensive services can support all your tax and accounting needs.