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Chapter CRYPTO40150

Document Cited in Related
Vincent
Published date30 March 2021
Record NumberCRYPTO40150
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

As with the tax analysis of other types of business, the question of whether a trade is being carried on is a key factor in determining the correct tax treatment.

Whether the buying and selling of exchange tokens amounts to a trade depends on a range of factors including:

  • frequency
  • level of organisation
  • intention

If a person’s activities do amount to a trade, the receipts and expenses will form part of the calculation of the individual or company’s trading profit.

Only in exceptional circumstances would HMRC expect businesses to buy and sell exchange tokens with such frequency, level of organisation and sophistication that the activity amounts to a financial trade in itself. If activities are considered to be trading then:

  • For individuals, Income Tax will take priority over Capital Gains Tax and will apply to profits (or losses).
  • For companies, profits (or losses) will form part of the trading profits instead of being a chargeable gain.

As with any activity, the question whether cryptoasset activities amount to trading depends on a number of factors and the individual circumstances. Whether a business is engaged in a financial trade through the activity of buying and selling tokens will...

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