Crypto tax rules are complex, and crypto tax software helps you to keep on top of your tax admin and ensure any gains are accounted for so you avoid nasty tax surprises later.
What is crypto tax software?
Crypto tax software helps you keep a record of crypto transactions and calculates the capital gain or loss when your crypto assets are sold, exchanged, given away or traded.
The best crypto software integrates with the exchange you use to manage your cryptocurrency. It automatically grabs and records details of your transactions when you execute an exchange or trade.
Most crypto tax software gives you the option to manually import your data. You can export your transactional data from your crypto exchange platform as a CSV file. This file can then be imported into your chosen crypto tax software.
Most crypto software programs also keep track of your transactions in a way that’s suitable for HMRC self-assessment forms and UK tax reporting. They can automatically fill in your tax forms at the end of the tax year, making sure you pay the correct tax that’s due, in line with crypto tax rules.
Crypto tax software jargon explained
Cryptoasset. Cryptoassets are digital assets and currencies including cryptocurrencies, utility coins and security tokens.
Crypto tax software. This is computer software designed to help record your crypto transactions and fill in your tax forms at the end of the tax year.
Crypto income. This is income you get from crypto mining and staking.
Crypto capital gains. This is usually the difference between the price at which you bought and sold the cryptoasset, minus any fees you paid.
Share pooling. The same types of crypto assets are pooled together by your tax software to work out your tax liability. Different rules apply if you sell and rebuy crypto assets on the same day or within 30 days.
Why do you need crypto tax software?
HMRC expects crypto investors to report their income and capital gains. If you have more than the annual allowances – £1,000 in crypto income from mining and staking; and more than £3,000 in capital gains, including crypto, in the tax year 2024/2025 for example – you’ll need to complete a self-assessment tax return.
In the UK, you need to report crypto income using the self-assessment tax return (SA100), and you have to report any capital gains or losses using a capital gains summary (SA108).
Crypto tax software should help you simplify keeping records and submitting tax forms for your crypto investments. Here are some of the advantages of using crypto tax software:
Saves time. Most software automates crypto record-keeping by integrating with your crypto exchange.
Helps with complicated tax rules. The UK tax rules for cryptoassets are complicated. There are fiddly rules that affect you if you’ve bought and sold crypto assets within 30 days or on the same day. The crypto tax software will help make sure you’re paying the right tax each year and don’t have any nasty surprises.
Generates tax forms. Most crypto tax software will help you complete your year-end tax forms so you don’t have to employ a specialist accountant.
Protects your profits. Top crypto tax software uses strategies to save you money on your tax bill. For example, you may be able to pool similar crypto assets to offset some of your gains and losses.
Lower risk of being fined. Because UK tax rules are complicated, there’s a significant risk of reporting incorrect crypto assets information on your tax return if you don’t use specialist software.
How to compare crypto tax software for the UK
When you’re looking for crypto tax software, there are some key features to compare.
Price
Some platforms like Koinly and ZenLedger offer free basic services for crypto investors who make under 10,000 transactions a year. To get a more comprehensive service, you’ll need to pay $49 (about £37) per year. It could be worth it to save you a massive headache at the end of a tax year.
Other platforms like CoinLedger don’t have free plans and charge yearly subscriptions depending on your level of transactions.
Data import options
Most crypto tax software lets you integrate your account with a range of crypto platforms and automatically import the relevant tax data. If you’re interested in one that isn’t compatible with your crypto platform, check that you can manually import CSV data.
Calculators
Working out your tax liability is the bread and butter of good crypto tax software. You’ll want to try to minimise your tax liability and maximise profitability where possible. For example, pooling crypto assets to work out your tax liability. This could reduce your tax liability by offsetting gains and losses for similar crypto assets.
Share pooling
HMRC has specific, complex share-pooling rules in the UK. Good crypto tax software should make sure you comply with these rules and your tax records are spotless. Here’s a brief summary of the rules:
Same-day rules. If you buy and sell the same cryptoassets on the same day, then you work out the cost of the disposed crypto by taking the average cost of the crypto bought that day. If you’ve sold more of a cryptoasset than you bought on the same date, then the next rule below applies to the remaining amount.
30-day rules. If you buy back the same cryptoasset you’ve sold within 30 days, the cost of the disposed crypto is calculated using a method called “FIFO“. If you have sold more of a cryptoasset than you bought within the following 30 days, then the next rule below applies to the remaining amount.
Section 104 Holding. Calculate the average cost for all cryptoassets bought before the disposal date. To find the cost basis of the crypto you disposed of, multiply the average cost with the number of cryptoassets/coins sold (similar to the average cost basis method). HMRC refers to this as a single pool in your Section 104 Holding.
These complicated rules were invented to stop crypto investors from manipulating their gains by selling and rebuying crypto assets to create an artificial loss.
Creating tax documents
Most crypto tax software can help you complete the necessary tax forms at the end of the tax year. In the UK, you’ll need to report crypto income in a self-assessment tax return (SA100) and record any capital gains or losses using a capital gains summary (SA108).
Integration with HMRC
Crypto tax software doesn’t currently integrate directly with HMRC, but the best platforms will help you automatically fill in your tax forms.
Investors should watch out because HMRC is becoming more active in chasing up people who may have crypto tax liabilities. They currently ask for information from several crypto platforms including Coinbase, and it is likely that HMRC will ask all the major crypto platforms to share customer information in the future.
Security
Most platforms provide detailed information on their security features, like 256-bit encryption and employee vetting.
Check out online customer reviews to see if the crypto tax company you’re considering has a good reputation. You can also search google to see if a company has had any recent breaches or hacks.
Customer support
Many tax software companies offer 24-hour support and live chat. They also provide online guides and resources to help you understand more about how crypto tax works.
What taxes does crypto tax software cover?
There are several types of tax that are relevant to crypto. We’ve given a brief overview of each one here.
Capital gains tax
Capital gains tax (CGT) is a tax you have to pay on any profit or gain you make from buying and selling taxable assets. Each year, you’ll get an annual allowance (£3,000 in the tax year 2024/2025).
For most assets, any gains over the annual allowance will be taxed at 20%. Take a look at our detailed guide to CGT for more information.
Crypto assets are subject to CGT if you make more than the allowance in gains. Any CGT on cryptoassets are added together with other gains to give you a total for the tax year.
You may have a potential capital gain if you sell your tokens, exchange tokens for a different type of crypto asset, use your tokens to pay for goods or services or give away your tokens to another person.
If you make total capital gains of more than the annual allowance (£3,000 in 2024/2025), including gains on crypto assets, then you’ll have to complete a capital gains summary (SA108) detailing capital gains or losses during the year.
2022 HMRC guidance on staking
Crypto lending and staking is a complex area and HMRC rules are constantly evolving.
Recently published HMRC guidance requires investors to treat crypto staking as a disposal for tax purposes at the moment the crypto asset leaves the user’s wallet.
CryptoUK, the trade association for the crypto assets industry, interprets this to mean that when a token is lent or staked into a platform or protocol, it may be classified as a disposal by the HMRC for tax purposes “at the moment the token leaves the user’s wallet.”
Using crypto tax software will help you keep up top of the current HMRC rules and make sure you’re reporting your crypto income and capital gains correctly.
Income tax on crypto assets
If you make more than the allowance – £1,000 in the tax year 2021-22 – from mining and staking crypto assets, you’ll need to pay income tax and complete a self-assessment tax return. It’s treated like other types of income, so you’ll pay 20% income tax if you’re a basic rate taxpayer and 40% to 45% if you’re a higher rate taxpayer.
Bottom line
Using crypto tax software can help simplify keeping records of your crypto asset transactions. It will keep secure records of all your crypto transactions by integrating directly with your crypto trading platform.
It will also save you a headache at the end of the tax year when you need to fill in your tax return. That’s because you’ll be able to automatically fill in the required HMRC forms. You can also rest easy that you’re complying with all the complicated HMRC rules on crypto tax.
Frequently asked questions
Crypto share pooling is where you pool similar types of crypto assets together to work out your capital gains and losses. Crypto tax software can help you do this automatically to save you time and hassle at the end of the tax year.
Crypto tax software varies in cost depending on the provider and service level you choose. Most crypto tax software starts at around $50 (about £37) per month.
If you’re paid in cryptocurrency, then it’s treated like any other pay. You’ll have to pay income tax and National Insurance on the value of the crypto assets received as payment.
If your total capital gains are under the annual allowance (£3,000 in the tax year 2024/2025), you may still need to report gains if both of the following apply:
The total amount you sold the assets for was more than 4 times your allowance.
You’re registered for self-assessment.
You will also need to report your crypto income if you earn more than £1,000 through crypto mining or staking.
Of course, you don’t need to use crypto tax software to report your capital gains, but it does make working out your gains a lot easier!
*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.
Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.
The tax you need to pay depends on your individual circumstances and can change over time. This content is for information only - it's not tax advice. You're responsible for carrying out your own checks and for getting professional advice before making financial decisions.
Alice Guy is a Suffolk-based finance writer, a busy mum of 4 older kids and a self-confessed personal finance geek. She trained as a chartered accountant with KPMG London before working for Tesco Plc as a business analyst. She loves to write about budgeting, saving, investing and building wealth. See full bio
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