Tax and Cryptocurrency -Advice From An Accountant

Introduction

Hello and welcome back to our channel podcast Let’s Talk Money and Mortgages. My name is Gemma, and here at WS we talk about money, mortgages, and positive money mindsets.
Today, we’re discussing cryptocurrency – covering what you need to bear in mind when investing, tax rules, and whether companies should accept crypto as payment.
Joining us is Wijay, founder and co-director of WS Accountancy, with over 20 years in the industry.

What do you need to bear in mind when investing in cryptocurrency?

Cryptocurrency is new and surrounded by hype.
It’s technically not a “currency” – it’s an asset, obtained through blockchain mining.
Examples: Bitcoin, Ethereum, and many others.
Its value is demand-and-supply driven and not regulated.
Unlike traditional investments, it is more volatile and unregulated.

What are the differences between investing in crypto and regular investments?

Crypto is more like gold (a commodity/asset) than currency.
Shares and commodities are traded on regulated exchanges, but crypto is traded on unregulated private exchanges.
For tax purposes, HMRC treats crypto as an asset class.

What’s the legal stance of making money with crypto?

It’s not gambling. Gambling winnings are tax-free, but crypto profits are taxable.
Crypto is treated as investment or trading activity – meaning tax applies.

How do you declare crypto earnings?

There are three types of individuals in crypto:
Miners – taxed under income tax and national insurance (similar to salary).
Day Traders – taxed under income tax (if HMRC defines it as trading activity under “badges of trade”).
Investors (buy and hold) – taxed under capital gains tax (CGT).
Example:
Mining: Receive 2 BTC worth £30,000 → income tax applies.
Later sell at £60,000 → CGT applies on the gain.
CGT rules: first £12,300 is tax-free. Then:
10% if basic-rate taxpayer.
20% if higher-rate taxpayer.

Is crypto taxed differently than other investments?

Very similar to shares – you pay CGT on gains.
Difference: Shares can be traded inside an ISA (tax-free), but crypto cannot currently be held in ISAs.

Do you get tax rebates for investing in crypto?

Not rebates, but you can offset losses against gains within crypto.
Governments don’t encourage crypto due to:
Unregulated markets.
High energy usage in mining.
HMRC is still consulting on crypto tax treatment as existing tax laws don’t perfectly fit.

What’s the most tax-efficient way to invest in crypto?

For shares: ISA is tax-efficient.
For crypto: no ISA option → normal taxes apply.
But you can use the £12,300 CGT allowance to stay tax-free if gains are under that amount.
Remember: “disposals” trigger tax – not just sales but also:
Using crypto to pay for goods/services.
Exchanging one crypto for another.

Any general tips for investing?

I’m not a financial advisor – always check with an IFA.
For amateurs:
Start small.
Be aware of tax on crypto-to-crypto swaps (still a taxable event).
Don’t sell your house to invest – it’s volatile.

How does it affect companies investing in crypto?

Companies don’t have capital gains tax – only corporation tax.
Tax treatment depends on whether the activity is:
Trading (frequent buying/selling).
Investment (buy and hold).
Company crypto taxation is more complex and requires detailed review.

Should companies accept crypto as payment?

Yes, it’s possible – some accountants and merchants do.
Example: Invoice for £100 → can be paid in crypto if accepted.
Merchant’s responsibility:
Treat payment as revenue at crypto value on day received.
Take on risk of price fluctuations afterwards.
Customer’s responsibility:
Using crypto to pay is a taxable disposal event.

What about cryptocurrency and money laundering?

Crypto’s unregulated nature makes it attractive for criminals.
Merchants must perform AML checks (KYC – Know Your Customer).
Large purchases (e.g., buying a Tesla) → company must check:
Buyer’s ID.
Source of funds.
Tax position.
This is why many businesses hesitate to accept crypto.

Closing Remarks

Gemma:
Thank you, VJ, for the detailed explanations. Just a reminder: this advice may not apply to everyone, so please check with your accountant or IFA. If you don’t have one, WS Accountancy can help.
We’ll be back next week with another episode of Let’s Talk Money and Mortgages.