You're a UK resident, you're new to crypto and have bought some BTC - do you owe tax on anything?

Disclaimer: this guide is not legal advice; for that, please consult a tax adviser.

Here is the quick answer. If you haven't sold anything yet, or if you have sold but the profit comes up to less than your annual Capital Gains Tax allowance, then no.

For more details read on:

1. I’VE BOUGHT SOME BITCOIN OR OTHER CRYPTOCURRENCY

When you buy bitcoin or cryptocurrency, nothing is expected of you at point of sale. However you will need a record of the price you bought it at to calculate taxes when you sell it in the future.

1. I WAS GIFTED SOME BITCOIN OR OTHER CRYPTOCURRENCY

For future tax purposes, make a note of the value of the gift on the date of the gift.

1. I’VE JUST SOLD SOME CRYPTOCURRENCY FOR FIAT

The tax that you might be liable for in this instance is Capital Gains Tax (CGT) – a tax on the profit that is made when you sell something that has increased in value. If tax is due it is only on the gain that you have made, not the entire amount you receive from the sale. This is why keeping records of the purchase value of your cryptocurrency is important. You can also include transactions costs such as transfer fees when calculating your gain.

The annual tax-free allowance for an individual’s asset gains is £11,300 for 2017. So if the profit from selling your cryptocurrency, in addition to any other asset gains, is less than this, you won’t have to report or pay tax on it.

(An extra tip for married individuals: you can gift up to £11,300 of assets to your spouse, and use their Capital Gains Tax allowance, thereby getting up to £22,600 of capital gains tax free annually.)

You have two options for how you declare your gains to HMRC:

a. As soon as you want after the sale using the ‘real time’ Capital Gains Tax service.

You must report by 31 January after the tax year when you had the gains. (The tax year runs from 6 April to 5 April the following year. So if your sale takes place on 18 April 2018, then you have to report by 31 January 2020. If your sale takes place on 4 April 2019, you also have to report by 31 January 2020.)

HMRC will then contact you with instructions for payment.

b. In your annual Self Assessment tax return

If you are self-employed or run a business, you might already send a tax return. But if you don’t, then you have to register for Self Assessment by 5 October following the tax year you sold your cryptocurrency. (Again, the tax year runs from 6 April to 5 April. If your sale takes place on 18 April 2018, or 4 April 2019, then you have to register by 5 October 2019.) If you’re already registered but haven’t received a letter reminding you to fill in a return, contact HMRC by 5 October. You must send your return by 31 January of the next tax year.

HMRC will then contact you with instructions for payment.

For further tips and information, consult http://cryptotax.uk for a free guide to managing your taxes as a new cryptocurrency investor.