In the United Kingdom, cryptocurrency is taxed by HMRC as property, not as currency. Individuals face capital gains tax on profits from selling crypto and income tax plus national insurance contributions on earnings from mining or working for crypto-related organizations. Taxable events include trading, earning, mining, airdrops, and dealing with DeFi protocols. While the first GBP 12,570 in capital gains is tax-free, subsequent gains are taxed at rates dependent on the individual's income tax bracket. Preparing for crypto tax requires diligent record-keeping and understanding complex guidelines, with the option to use specialized tax software or professional accounting services for compliance.
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Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. It's decentralised, meaning it operates independently of a central authority like a government or bank. This decentralisation is often achieved through a technology called blockchain, a distributed ledger that records all transactions across a network of computers.
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