Quote from: JamesDaniel90 on March 17, 2023, 05:47:29 PM

I have been in crypto 14 months now and yet to cash out any profits but I am just wondering when I do so how the tax works? Do I have to pay that straight away or do I have months after cashing out to pay the taxes on my profits?

At the moment I am just under break even, if my portfolio was to 2x in the coming months for example and I decide to cash out what I put into the market and leave the profit. How does that work?

I want to be ready for when the time comes to cash out and understand how and when I need to pay the taxes.

In the UK, the tax treatment of cryptocurrency is subject to HMRC's guidance on cryptoassets. HMRC considers cryptocurrencies to be assets, and therefore, profits made from buying and selling cryptocurrency are subject to capital gains tax.

When you sell your cryptocurrency, you must calculate the capital gain or loss on the disposal of the asset. The capital gain is the difference between the sale price of the cryptocurrency and its original cost, including any fees and transaction costs.

In the UK, you have an annual capital gains tax allowance, which is currently £12,300 for the tax year 2022/23. Any capital gains below this allowance are tax-free. However, if your capital gains exceed the annual allowance, you will be required to pay capital gains tax on the profits above the threshold.

You will need to report any capital gains tax liability on your self-assessment tax return, which is due by January 31st following the end of the tax year. If you fail to report your capital gains tax liability or submit your tax return by the deadline, you may face penalties and interest charges.