Cryptocurrency Accountants | UK Cryptoassets Tax Advice
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Cryptocurrency
Tax Advice

Specialist cryptocurrency tax advisors and accountants

Investing and trading in cryptocurrency has become increasingly popular over the last few years.

However, the tax treatment of any profits made through these activities is poorly understood. Many crypto investors mistakenly believe they do not have to pay tax on any profits – this is not the case!

As there are potentially large sums of money involved, this has raised the profile of cryptocurrency investment with HMRC who want to ensure that all individuals and businesses are paying the correct amount of UK tax on their cryptocurrency and other cryptoassets. Therefore, it is important to be aware of your tax obligations for your crypto activities and you seek professional advice from a specialist cryptocurrency accountant and tax advisor.

How we can help you

PKF Francis Clark is a firm of chartered certified accountants and tax advisors. We have a specialist crypto team who are passionate about crypto and blockchain and the exciting opportunities they present alongside an understanding of the tax and legislation landscape.

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Help for individual crypto investors

We can provide robust cryptocurrency tax advice, structure your affairs so that they are as tax efficient as possible whilst also making sure the correct amounts of tax is paid.

If you have been involved in investing, trading, arbitrage exchanges or margin trading and you don’t think you have got the tax right – we can ensure your matters are up to date.

Help for crypto businesses & blockchain technology businesses

As a business you need to have confidence that your accountant understands the sector in which you operate and fully understands your needs and can help spot opportunities.

We can help with domestic and international structuring of your business, issues around remuneration in crypto, accessing Enterprise Investment Scheme and identifying and assistance with R&D tax credit opportunities alongside the usual accounts and tax compliance services you would expect.

How are cryptocurrencies and cryptoassets taxed?

The main problem is that there is no specific crypto tax legislation. Therefore, in the UK, profits are taxed in different ways depending on the actions and circumstances of the taxpayer. Capital gains tax, income tax and inheritance tax all come into play when looking at buying, selling and acquiring cryptocurrencies.

When individuals buy and sell cryptoassets, depending on the frequency and value involved, this is usually seen as an investment activity and any gains made are potentially subject to capital gains tax. There is an annual exemption, but if this is exceeded (including the selling of other assets such as shares or property), tax will need to be paid.

It is a mistake to believe that only when you sell a cryptoasset for money, say in pounds sterling, that this is when it becomes a gain and therefore liable for capital gains tax. A gain can also arise when cryptoassets are exchanged – say from Cardano to Tezos or Bitcoin to Ethereum or if crytoassets are gifted to another person or when they are used to pay for goods and services.

This calculation can be complicated, particularly if you have other assets that you are also disposing of during the tax year. Our team can help accurately calculate the gain, prepare the tax return, and assist with effective tax planning to make sure it is as tax efficient as possible.

Income tax and national insurance become liable on the value of the asset when certain criteria are met and include things like remuneration from employers, crytoasset trading, mining and even occasionally airdrops.

When an employee receives cryptoassets as earnings from their employer, then income tax and national insurance become due. Additionally, when the cryptoassets are disposed of later, then they can also be liable for capital gains tax.

If HMRC considers your activities to be a trade, rather than investing, then you will be taxed as if you are running a business and income tax will be due.

There are a number of factors that influence this decision, and it can be complicated. It is therefore important that professional advice is sought from specialist cryptocurrency accountants.

When receiving cryptoassets as rewards for mining it will depend on the level of reward, how active you are and from whom you are receiving the assets whether you fall into taxable trade and are therefore liable for income tax. Again, this is a complex area and advice should be sought at an early opportunity.

On top of this, if cryptoassets are kept and then disposed of later these are also then liable for capital gains tax (if gain is above the allowance for the tax year). Again, careful tax planning is advised – and we can help.

These are not usually subject to income tax where the asset has been dropped into your wallet for a personal capacity. However, where this has been done in exchange for a service (or a service that will be performed) then it can fall into income tax rules – take advice!

Cryptoassets are in the same asset class as property for inheritance tax purposes and are therefore subject to inheritance tax and effective tax planning should be undertaken to ensure your tax affairs are in order.

Cryptocurrency investing – the wild west?

We are here to help. With an increasing number of scams taking advantage of misinformed crypto investors, we encourage those new to digital assets to ensure they have all the information they require before taking the leap. Whilst we cannot provide any investment advice, we can discuss risk and help you to access safe and secure ways of crypto investing.

Businesses Operating in Blockchain Technology

In the growing field of blockchain technology, you need a business advisor who speaks your language. From TGEs to SAFTs, DApps to airdrops, minting to mining, ERC-721 to ERC-1155, our team understand your business, and are on hand to work with you every step of the way.

Understanding the tax environment in which your business operates is essential to mitigate financial risk and to meet your obligations. With an increasing amount of money in this market and locked in DeFi, tax legislation is playing catch up.

Alongside the compliance services that you would expect from an accountant: accounts preparation and financial reporting, self-assessment and corporate tax returns, audit, VAT and company secretarial services, we also provide support to businesses by offering solutions and efficiencies with the aid of institutions and contacts in our network.

NFTs (non fungible tokens)

Perhaps you’re an artist, or a collector. Maybe you’re coordinating the next big NFT project in the collectible or gaming industry. We understand the difficulties that lie ahead working in a crypto environment in a fiat world and can discuss strategies to ensure your affairs remain tax efficient, and that you always have enough fiat to cover your UK tax obligations.

Remuneration in cryptocurrencies

Whether you have issued SAFTs, options over tokens, or are considering remunerating your employees, contractors, or anyone within your network with tokens, there are very specific employment rules that govern how these would be taxed. These rules are based on the timings of events that have implications for the employer and the recipients. Our team will make sure that you are able to navigate this.

Domestic and international structuring

Cryptocurrency is global, and so are we. With the help of our PKF International network we can link up with other offices around the world to put our clients in touch with advisors who understand digital assets. We can assist with tax structuring a UK entity within an international structure and advise on the necessary tax issues that need to be considered.

Enterprise Investment Scheme (EIS) & Seed Enterprise Investment Scheme

EIS is an important source of funding for new, fast growing businesses on the forefront of technology. There are however criteria that have to be met and our team of EIS specialists can help make sure you are investment ready.

Research & Development Tax Credits

As an innovative busines who is developing new technologies it is very likely there are opportunities to claim R&D tax credits on projects you have worked on or are working on – our specialist R&D team can help identify opportunities and maximise claim values.

HMRC enquiries

Our team has experience in dealing with cryptoasset enquiries, and we certainly value our ability to speak to HMRC, not only about the crypto tax aspects of the investigation, but with a deep understanding of the underlying assets in question.

Management reporting, forecasting & budgeting

We work with our clients to translate the numbers into something tangible that can be understood to maximise the potential of any business.

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We are not just Tax and Accounting Advisors

Thanks to our extensive network within the sector, we can put you in touch with experienced people to make your ambition a reality.

We work with solicitors, developers, NFT platforms, custodians & exchanges, to help build you the solution you require, whilst being there to support you throughout your journey. Whatever your cryptocurrency or blockchain need, we have you covered.

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Contact Ben Lee

Ben heads up the firm’s cryptocurrency & blockchain offering.

He is a DeFi curious protocol protagonist, having monitored the sector for over a decade, advising numerous clients who have invested, traded, or mined cryptocurrency, or have started their own blockchain-related business.

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