Ho, ho, ho… it’s almost crypto Christmas! 🎄
With the festive season just around the corner, you might be considering gifting something a bit more futuristic this year… crypto! 💳 How very internet-era of you! But as ever like the ghost of Christmas past, HMRC is looming over to remind you not to forget the tax implications.
If you had no idea tax was even a consideration, then read on!
First of all, what in the world is crypto?
If crypto isn’t your thang, here’s a quick rundown of the basics. Crypto is short for cryptocurrency. It’s a form of digital currency. Some examples of crypto coins and tokens are Bitcoin, Ethereum and XRP.
The whole concept of crypto is extremely advanced and technical but it’s pretty interesting, too. First of all, it’s created using encryption algorithms. Just wow.
Second of all, it’s distributed outside of government control unlike traditional currencies such as GBP or USD.
And thirdly, it doesn’t actually have any central authority at all. It’s governed democratically, by the crypto bro masses 🤯
But despite all of this, it doesn’t mean that crypto isn’t subject to taxation.
Do I have to pay tax to gift crypto?
Crypto is classed as a valuable asset, which means you’ll most likely have to pay Capital Gains Tax (CGT) if you gift it to someone.
The general rule is that when you sell crypto (or any valuable asset), you have to pay CGT on any profit that exceeds the £12,300 CGT allowance. So anything less than £12,300 is tax-free, and unlike other taxes, only profit is taxable.
Gifting crypto, however, is a tad bit techy so listen up. 🗣️