NiceHash UK Crypto Tax Guide
The deadline to file and pay your taxes for UK investors is just around the corner on the 31st of January - so we’ve teamed up with crypto tax calculator Koinly to help you learn everything you need to know ahead of the deadline!
The HMRC self assessment tax deadline looms. Not only that, but you need to pay any taxes due by midnight of the 31st of January as well, including any taxes due on your crypto!
HMRC has extensive guidance on crypto taxes in their crypto assets manual, but not everyone has time to navigate through pages and pages to figure out their crypto tax obligations when the deadline looms.
That’s why we’ve teamed up with crypto tax calculator, Koinly, to help you learn everything you need to know about UK crypto tax in our 5 minute crash course. Let’s go!
Crypto Tax 101
The clue is in the name, but HMRC views crypto assets as a kind of asset and it’s this view that dictates the tax treatment. It means crypto may be subject to Capital Gains Tax or Income Tax, depending on the specific transactions you’re making, so we’ll look at both.
Skip the complicated tax rules with a crypto tax report from Koinly! Save 50% on your Koinly report today with the code NICEHASH.
Crypto Capital Gains
When you dispose of an asset in the UK, you’ll make a profit or a loss, also known as a capital gain or loss. The easiest way to think of a disposal is anytime your crypto changes ownership, which means disposals include:
- Selling crypto for GBP or another fiat currency.
- Swapping crypto for another cryptocurrency - including tokens, stablecoins and NFTs.
- Spending crypto on goods or services.
- Gifting crypto - excluding to your spouse or civil partner which is tax free.
- A variety of DeFi investment activities where you receive tokens in exchange for capital or where you no longer retain beneficial ownership of your crypto.
If you make a gain from any of the above transactions, you’ll pay Capital Gains Tax on that gain if you’re over the Capital Gains Tax allowance.
Everyone in the UK gets a rather generous Capital Gains Tax allowance of £12,300 a year, meaning if you have less than £12,300 in capital gains (from all your capital investments including crypto), you won’t pay any Capital Gains Tax. However, in the 2023 financial year (starting 6th April), this allowance is being cut to £6,000, and halved again in the 2024 financial year to £3,000.
Of course, not every disposal will result in a gain, especially in the current market. If you make a loss when you sell, swap, spend or gift crypto, you’ll have a capital loss. You don’t pay tax on capital losses, and they’re actually good news for your tax bill as you can offset losses against gains to reduce your overall tax bill. You can also utilise losses from crypto investments to offset against gains and bring you back within the CGT allowance and carry any unutilised losses forward to offset against future gains!
An important note though - you need to register losses with HMRC within four years in order to carry them forward. You can do this as part of your self assessment or by informing HMRC in writing.
How much Capital Gains Tax will you pay?
Want to know how much tax you’ll pay on your crypto gains? It all depends on your total income throughout the financial year and which Income Tax band you fall into, but you’ll pay either 10% or 20%.
| Capital Gains Tax Rate | Income Tax Band |
| 10% | Basic Rate Income Band (up to £50,270) |
| 20% | Higher Rate Income Band (up to £150,000) |
| 20% | Additional Rate Income Band (more than £150,000) |
It’s important to note that these bands are based on your total annual income - including any capital gains you’ve made.
Crypto Income
When you earn new tokens, HMRC may view this as additional income and as such it may be subject to Income Tax and even National Insurance contributions in some instances. Investment activities which are subject to Income Tax include:
- Getting paid in crypto - seen as money’s worth and also subject to NI.
- Mining - seen as miscellaneous income.
- Staking - seen as miscellaneous income.
- Airdrops - seen as miscellaneous income or receipts of an existing trade.
- A variety of DeFi investment activities where you earn new tokens.
If your crypto is subject to Income Tax, you need to calculate the fair market value of your coins or tokens in GBP on the day you received them and report this to HMRC. This is the figure you’ll pay Income Tax on.
It’s also important to know that even if you’ve already paid Income Tax on your crypto, if you later dispose of your crypto and make a gain, you may still be liable for Capital Gains Tax if you’re over the tax free allowance.
How much Income Tax will you pay?
It all depends on what Income Tax band you fall into - so you’ll pay between 0% to 45% in tax depending on your total annual income. You can see the bands below:
| Band | Taxable income | Tax rate |
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 - £50,270 | 20% |
| Higher rate | £50,271 - £150,000 | 40% |
| Additional rate | £150,000+ | 45% |
Please note, you do not get a personal allowance on income over £125,140.
Are any crypto transactions tax free?
Yes - HMRC is clear that there’s some transactions which are not subject to tax, including:
- Buying crypto with fiat currency like GBP.
- HODLing crypto.
- Transferring crypto between your own wallets - although transfer fees may not be.
- Gifting crypto to a spouse or civil partner.
That last bullet point you might want to pay extra attention to - because you can make the most of this rule and optimise your tax position by utilising both your own and your partners' Capital Gains Tax Allowance and personal Income Tax allowance to ensure your household has the lowest tax bill possible.
When to file UK crypto taxes
You need to report any income from crypto or capital gains from crypto in your Self Assessment Tax Return by the 31st of January 2023. But you might want to do this sooner rather than later as the deadline to pay any taxes due is also the 31st of January 2023.
How to file UK crypto taxes
You can file your crypto taxes online via the Government Gateway service, or using paper forms SA108 & SA100. Please note if you file with paper forms, the deadline is the 31st of October 2022.
How to calculate & file crypto taxes with our partner Koinly
Calculating your crypto taxes is time consuming if you’re an active investor - especially if you have regular income, like NiceHash mining rewards. You’ll need to identify the fair market value of any crypto income in GBP on the day you received it. As well as this, you’ll need to calculate any capital gains and losses using the approved share pooling cost basis method and report all of this to HMRC in your self assessment.
This is why NiceHash has partnered with Koinly to help you file in minutes and make crypto less taxing. Here’s how it works in five simple steps:
- Sign up or log in to your Koinly account.
- Connect NiceHash to Koinly. You can do this automatically via API, or by uploading a CSV file of your NiceHash transaction history, learn more.
- Sync all the other wallets, exchanges, blockchains and services you use with Koinly via API or CSV file. Koinly supports more than 700 platforms.
- Koinly calculates your tax liability, including the fair market value of any income and your capital gains and losses using the share pooling cost basis method.
- Download your HMRC tax report. Upgrade to a paid Koinly plan when you need to download your report. Koinly can generate a variety of reports for UK investors including the HMRC Capital Gains Summary and Complete Tax Report. You can then take these figures and report them in your self assessment tax return.
Calculate your UK crypto taxes fast with Koinly and NiceHash. Save 50% on your Koinly tax report with the code NICEHASH.
PS: Want step by step instructions on how to connect your NiceHash account with Koinly? Check it out here!