In most cases, individuals hold cryptoassets (such as Bitcoin) as a personal investment, usually for capital appreciation in its value or to make purchases. They will be liable to pay Capital Gains Tax when they dispose of their cryptoassets.
- selling tokens
- exchanging tokens for a different type of cryptoasset
- using tokens to pay for goods or services
- giving away tokens to another person (unless it is a gift to your spouse or civil partner)
If the taxpayer’s activity is trading, then Income Tax will take priority over CGT and will apply to profits (or losses).
Individuals will be liable to pay Income Tax and National Insurance Contributions on cryptoassets which they receive from:
- their employer as a form of non-cash payment
- mining, transaction confirmation or airdrops
There may also be cases where an individual is running a business which is carrying on a financial trade in cryptoassets and will therefore have taxable trading profits.