Capital gains tax is applied when a crypto asset that has appreciated is disposed of in the following manner
- Selling for fiat currency
- Trading for another cryptocurrency
- Spending it on goods and services
- Gifting cryptocurrency to someone other than a spouse or civil partner
The CGT rates are determined by the crypto investors' overall income. If the person's basic income comes up to 50,270 GBP, they will be taxed a 10 CGT, and if their annual income exceeds 50,270 GBP, they will be charged a 20 CGT.
2. Income TaxIncome from cryptocurrency-related activities is taxed similarly to traditional income. The categories include
- Receiving payment in cryptocurrency for goods or services
- Rewards from staking crypto assets
- Rewards from mining crypto assets
- Airdrop tokens
UK's income tax on crypto varies based on total taxable income. There is zero tax for those with an income of up to 12,570 GBP, 20 for income between 12,571 GBP and 50,270 GBP, 40 for income between 50,271 GBP and 125,140 GBP, and 45 for income over 125,140 GBP.
