If you hold or invest in cryptocurrency, or even if your employer pays you in a cryptocurrency such as Bitcoin, you may need to declare this on your self-assessment form. For anyone who didn’t in the 2022/23 form which should have been filed before January 31, it would be wise to get advice quickly on how to amend this error.

HMRC has urged anyone with crypto assets to declare any income or gains above the tax-free allowance on their tax return and they should have already paid any tax due. If you haven’t, you should address this as soon as you can.

When would I pay tax on cryptocurrency?

Someone may need to pay tax on cryptocurrency if a person:

  • Receives crypto assets from employment, if they’re held as part of a trade, or are involved in crypto-related activities that generate an income.
  • Sells or exchanges crypto assets, including:
    • Selling crypto assets for money.
    • Exchanging one type of crypto asset for another.
    • Using crypto assets to make purchases.
    • Gifting crypto assets to another person.
    • Donating crypto assets to charity.

Source: Gov.uk

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “People sometimes forget that information about crypto-related income and gains needs to be included in their tax return. Some people affected may not have had to do a tax return before, so it is important people check.”

How are cryptocurrencies taxed?

The way cryptocurrency is taxed will depend on how you have acquired or sold them, or whether you have given them away. For example, to check if you need to pay capital gains tax (CGT) you need to consider how much gain you have made on each transaction. The way you calculate your gain is different if you sell your tokens within 30 days of buying them.

If you got your cryptocurrency for free, then you would need to work out the gain from the market value of the asset. CGT doesn’t need to be paid on the cryptocurrency if you have paid income tax on it, but if you have made gains after receiving it, you would still need to pay CGT on any gain arising afterwards. You can find out more about how your cryptocurrency is taxed on Gov.uk.

Although the value of cryptocurrency is very volatile, there is an event coming up in the next few weeks which in the past has resulted in Bitcoin increasing significantly in value. This event is known as the ‘halving’ which is when the reward for mining Bitcoins is cut in half. It has happened on average every four years, and results in a reduced rate at which Bitcoins are created which has in the past increased the price.

Bitcoin last halved on May 11, 2020, and the next halving is expected to happen around mid-April at the current rate of mining. If the price of Bitcoin goes up after the halving in April this time, then anyone holding Bitcoin before this may see a gain that they would need to include in the tax return.

We can help you meet your obligations

If you forgot to include cryptocurrency gains in your most recent tax return, or you want to find out more about how your cryptocurrency holdings might need to be declared to HMRC, then please get in touch with us and we can explain what you need to know.

The end of the P11D is expected in 2026

The P11D form which has been used to process ‘benefits-in-kind’ such as loans for season tickets and company cars will no longer be used after April 2026, as HMRC will ask businesses to deal with all these benefits through the payroll instead.

HMRC announced earlier this year that the regime for dealing with the taxation of benefits-in-kind would change as it works to simplify the tax system. HMRC plans to automate the processing of these claims through the payroll instead, which should mean these claims are processed more quickly for employees.

What changes have been decided?

Even though HMRC is planning much further ahead than has happened in the past, it still needs to produce guidance after working with industry experts. There are still some complexities that will need to be resolved before all benefits can be dealt with through the payroll. But once this is complete, it should simplify the tax affairs of 3m people and reduce the need for them to contact HMRC.

The administrative burden should also be reduced for thousands of employers, according to HMRC, as it will remove the need for 4m end-of-year returns to be submitted. The guidance “will be made available in advance of 2026,” HMRC said.

Employers will need to be ready to change their systems to deal with these changes and should keep a close eye on the employer bulletins from HMRC as they appear, and stay in close contact with their accountants so they are ready.

Let us help you

If you need any help with changing your payroll systems to get ready for the P11D changes in 2026, please get in touch and we will be happy to offer you the help and guidance you need.