September 4, 2025 • 20 mins
Get a free audit of your indemnity cover here >>> https://quote.allmedpro.co.uk/dental-indemnity-2025-new-proposal-dwi/
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Collect unlimited free verifiable CPD for UK Dentists here >>> https://www.dentistswhoinvest.com/videos/got-crypto-listen-to-this-to-make-sure-you-dont-break-any-tax-rules-with-emily-bingham
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We've brought in crypto-specialist accountant Emily from Alexander & Co to demystify the complex world of cryptocurrency taxation specifically for dental professionals. This comprehensive guide walks you through everything from basic capital gains calculations to the nuanced tax implications of staking rewards and stable coin investments. With capital gains tax rates now at 18% for basic rate taxpayers and 24% for higher rate taxpayers, getting this right is essential for your financial wellbeing.
The conversation reveals several potential pitfalls that catch many dentists by surprise. Did you know that the "30-day rule" could create tax liabilities even when you believe you've made losses? Or that staking rewards are subject not only to income tax at your marginal rate but also to student loan repayments? For higher-rate taxpayers with outstanding student loans, this means nearly half of your staking rewards could be claimed by HMRC and the Student Loans Company combined.
Looking ahead, we explore the seismic shift coming in January 2026 when the Crypto Asset Reporting Framework makes it mandatory for exchanges to share your data with tax authorities. With 52 countries already committed to this global initiative, the window for getting your crypto tax affairs in order is closing. Emily shares practical advice on voluntary disclosure and how to minimize penalties if you haven't been fully compliant.
Don't miss this opportunity to claim free verifiable CPD by completing the short questionnaire linked in the description. Equip yourself with the knowledge to confidently manage your crypto investments while staying firmly on the right side of HMRC regulations.
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Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dr James (00:00):
HMRC are clamping down on crypto whenever it comes to
our tax affairs.
So, in order to prevent runningafoul of this, we need to equip
ourselves with the knowledgeneeded to stay on the right side
of the law, and that's why I'mjoined today by a crypto expert
accountant who also deals withdentists, and we're going to be
(00:22):
getting into the ins and outswhat you need to know how crypto
is taxed and how to stay on theright side of the rules.
I'm also happy to share thatthere is free verifiable CPD
associated with this podcastepisode.
Whenever you finish the episode, all you have to do is click
the link in the podcastdescription.
It'll take you right through tothe Dentists Who Invest website
(00:43):
.
You'll be able to complete ashort questionnaire and, once
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable CPD certificate,
which is entirely free.
What that means is this podcastepisode will be able to
contribute towards yourverifiable CPD hours during this
learning cycle.
During this learning cycle, weneed to talk about not just
(01:08):
crypto, but specifically thetaxation aspect of crypto,
because it's been so long sinceI've done a podcast on this,
emily, do you think a good placeto start would be just to
simply state how crypto isusually taxed in the UK.
Is it any different from otherassets?
Emily (01:25):
Yeah, absolutely.
State how crypto is usuallytaxed in the uk.
Is it any different from otherassets?
Yeah, absolutely.
Um, so, in general, crypto istaxed based on existing
legislation.
So they've not kind of releasedany legislation that is
specific to crypto, uh, whichdid make it quite complicated
initially because they all theyhad to fit something that was
pretty complicated into existingrules, uh, which, yeah, makes
it a bit of a nightmare.
(01:46):
But essentially how it works isif you sort of trade one crypto
for another or cash out intoyour bank account, there may be
a capital gain there, so it'staxed on the capital gains tax
where you've got to swap, socapital gains tax the rates they
were previously 10 and 20percent, they're now 18 and 24
percent and it's based on any,basically any, profit you've
(02:10):
made.
Now the actual calculation ispretty complicated because it
follows the share legislation.
So, um, what it means is youmay think that you've made a
loss, for example, when in fact,for tax purposes, you've made a
loss, for example, when, infact, for tax purposes, you've
made a profit.
So we found a lot of peoplehave been completely thrown off
by the rules.
Luckily, there's some great taxcalculators out there which
(02:31):
help you to see how it's beencalculated.
So we often use Coinly, whichis kind of the biggest one.
There's a crypto tax calculator, which is also pretty useful,
where you can just kind of linkeverything up.
So that's a big one.
The capital gains tax Also someelements of tax under income
tax.
So things like stakingsometimes airdrops, depending on
(02:53):
what they are those tend to betaxed under income tax as other
income, so you'll pay the usualincome tax rates on those, but
you don't have to pay anynational insurance.
Dr James (03:09):
So it's just classed as other income on your tax
return.
There we go.
Okay, I've written on that one,and that's presuming that it's
all in per.
Just to really spell this out,that presumes that, uh, it's all
in a personal name, right, andif it's in a company, obviously
it would be well it'd becorporation tax if it was in a
company.
Yeah yeah, because I rememberand this is, this is one for the
audience right here I rememberone year oh, I can't remember
what year it was, in fact, Ithink it was.
I can't remember, anyway, itdoesn't matter and I was like,
(03:32):
okay, cool, I can sell 10,000 ofcrypto, whatever the old limit
was CGT limit, right.
And I was like, oh, you sell10,000, right, and you're fine
because you made 10,000 profitthat year, but it doesn't work
like that, right?
You have to know the amount ofcrypto you originally had and
(03:52):
the ratio of.
You'll probably explain itbetter than me.
How does it work?
Emily (03:57):
Yeah.
So if you say, bought a load ofcrypto in the past and then
you've sold it today and thenyou're not planning on making
any more sales in the next 30days, is how you'd expect to be
taxed.
It would be what you'vereceived for the sale of it all,
less what you paid for it.
What gets more complicated isif there's any transactions
within 30 days of you selling it, because essentially you are
(04:20):
deemed to have re-bought thesame asset.
So you may then not have a gainwhen you thought you previously
would have done so.
It almost takes a futurepurchase as the cost rather than
a previous one.
So that's where it can get verycomplicated.
And also, if you've receivedstaking income, for example in
the same currency, then it'lltake the market value on the
(04:41):
date you receive it and it willtax that under income tax, but
that will also be your cost basefor when you then sell it.
So that is really catching alot of people out, because
they'll receive the income betaxed when it's worth a certain
amount.
If that value then falls andthey haven't sold it, they're
basically going to be selling itwhen it's worth less and
(05:04):
they've had to pay tax when it'sworth way more, so it's it can
really kind of it's it's.
I've seen a lot of peoplegetting caught out by it.
So I always tell people youshould cash out the tax element
if you ever receive any income,also if you're making any any
sort of disposals in general.
Because you have to pay yourtax in pounds.
You can't pay in crypto, so youneed to get the money.
Have to pay your tax in pounds.
(05:24):
You can't pay it in crypto, soyou need to get the money out to
pay it.
So don't just leave it in therethinking, oh, it might go up
again, like you need to pay thetax, so you should get it out,
so that's kind of why I alwaysrecommend, yeah, 100%, because
that can massively catch peopleout, especially if they sell and
then they buy back in and thenthe value goes down.
Dr James (05:46):
You're reliable, buy back in and then the value goes
down.
You're at, you're liable on auh, a great deal, or potentially
a great deal of tax with moneythat you may not have liquid and
you might find yourself sellinga lot of your crypto because
obviously it's went down, so,unfortunately, you need to sell
more to get the same flippingmoney out.
Watch out for that one, guys,anyway.
Um, so yeah, we've covered howcrypto works in relatively
simple situations, as in whenwe're just buying and selling
(06:08):
Bitcoin or some of the altcoinsas well, because, it's well,
they're all taxed in the sameway, in that sense, when you're
buying and selling.
Of course, this is one to watchout for for the traders in the
audience, because you just haveso many transactions flying
around and they're really hardto keep on top of.
You mentioned coinly just asecond ago, back when I used to
(06:30):
use uh how can we say this?
Uh apps and calculators for thetax side of things.
They were really, really,really.
Not that they were quiteprimitive, let's just say that
and they didn't really work thatwell.
So you you advocate nowadaysthat that's the best way to do
it.
Emily (06:46):
I know we've named coinly , but some sort of crypto tax
calculator I mean when thenumber of traction transactions
involved it's borderline,impossible to do it manually.
You need to use some sort ofsoftware for it.
So coinly has it's definitelyimproved a lot since it first
kind of instead, we've used itfor years now um, and we've, we
kind of we're in communicationswith them and if there's any
ever any issues, we kind ofwe've used it for years now and
we're kind of wearingcommunications with them and if
there's ever any issues, we kindof communicate that back.
(07:08):
So they're always looking toimprove things and we just find
it's good because you can linkyour wallets with an API and
pull everything in.
So you've got all the datathere.
What it's not always perfect atis like tracking it correctly,
getting the right tags on things, matching up lines.
So we always will do a review ofsomeone's account before we put
(07:29):
anything into a return, whichis something I think a lot of
accountants aren't doing becausethey're just relying on it
because of the lack of knowledgearound it.
So we have a team that willactually look through the
account and ask you questions ifthere's anything that looks
like it's sticking out.
And I've dealt with some HMRCinquiries and found HMRC are
asking for the Coily reports.
They're asking for thesupporting data, so they will be
(07:51):
looking for the same things weare.
So we're hoping to kind ofaddress the issues before they
even get to HMRC.
So if they do ask any questions, we've already got the answers.
Dr James (08:02):
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Okay, brilliant, so we'vecovered how crypto is taxed
typically.
You mentioned staking earlier,yeah.
(09:10):
Which is something that a lot ofcrypto aficionados participate
in, shall we say, and the way wecan explain staking in a simple
sense, or in simple terms, iskind of complicated.
You need to know a little bitabout how crypto works to go
into a lot of detail, but theway it works is you basically
(09:31):
place a certain amount of acrypto in a ring fenced wallet
and then, in return for thatbeing the case, you get paid a
yield on that crypto in thecrypto that you staked, or
usually in the format of thecrypto that you staked is the
simplest way I can explain it,so hopefully everybody was
(09:51):
following that one.
And how is that taxed then?
Emily (09:55):
so when you do that initial transfer in that's you
still own that.
You're not disposing of it, sothat's fine.
There's no tax implications ofthat.
The only tax is when you thenreceive the staking rewards back
, so that is taxed as otherincome on your tax return.
So that'll be.
You pay income tax but nonational insurance contributions
.
So it's either 20, 40 or 45,just depending how much you earn
(10:18):
um is, and you also have athousand pound trading allowance
which you can utilize againstit.
So if you've not utilized thatanywhere else when you return um
which it depends on what you'redoing but if you've not
utilised it, then basically yourfirst £1,000 of income you earn
from staking won't get taxedbecause you've got this
allowance you can offset againstit.
Dr James (10:39):
Interesting, and is that the same allowance that you
get whenever you sell stuffonline online?
You sell products online, or isthat a different allowance?
Emily (10:48):
yes, you're, is that like the?
Dr James (10:50):
other income one right .
So if you, if you have a smallside gig business and you sell
things online and you've alreadymade a thousand over there,
it's actually going to push yourstaking potentially into your
income, yeah, into being taxable, yeah and it's also going to be
um the case that potentiallythat it may push your marginal
(11:13):
income into that bracket as well, from your job too yeah, yeah,
it could, and if it goes so high, it could even make you lose
your personal allowance um.
Emily (11:23):
So that's kind of you get taxed even more.
So we have seen it.
Um, yeah, and also it's worthnoting because a lot of people
that invest in crypto are quiteyoung um that if you have a
student loan, student loanrepayments also take account
staking income.
So, yeah, that that mean ninepercent will come to be taken
from your staking income.
So if you're a higher ratetaxpayer, you'd have 40 income
(11:48):
tax plus nine percent um studentloan.
So it's almost half yourstaking is already gone um, and
if you've not sold it for aprofit, then it's not looking
good yikes, okay, wow, I'mlearning a lot today.
Dr James (12:00):
I didn't know that.
That was how they um, theydealt with staking.
And, of course, another thingto mention is we've dealt with
staking.
Slight distinction between whatI'm about to talk about now and
staking, although on the faceof it it mightn't seem that
apparent.
But there is also high interestcrypto bank accounts so you can
stake your stable coinsinverted commas which are
(12:23):
cryptos that are tied to thevalue of certain fiat currencies
or real world currencies.
So a common one is US dollarcoins, so it'll always be the
equivalent of the US dollar.
It's pegged to its value, soone of these cryptos will equal
a dollar, and apparently theyhave all these dollars in
reserve as well somewhere.
So they say anyway, at leastthat's the claim, um, so when
(12:44):
you stake your dollar coins in ahigh interest bank account,
then I believe there's slightlydifferent rules still, because
that interest, have I got thatright?
Emily (12:57):
it wouldn't be bank interest if it's not actual
currency.
So as it stands, a hmlc is notrecognising stable coins as
currency, so it essentiallywould fall under the same thing
as staking.
So it would be other income.
So it would fall under thatrather than on the bank interest
section of your returnno-transcript.
Dr James (13:46):
So it's good that we've had that update, because
obviously, if it was categorizedas interest, there's different
rules on that.
Still, it doesn't necessarilycount towards your income, does
it it?
Emily (13:56):
is still income.
It just lands in a separatearea of your return.
There's a different allowanceavailable, so you probably won't
get the £1,000 tradingallowance which is kind of the
key bit.
Dr James (14:06):
Right, because I think not to digress too much, I
think, whenever it's interest,if you're in the basic tax rate,
you have a £1,000 allowance andif it's in the higher then it
becomes £500.
But it would be categorizeddifferent, differently obviously
.
So you might have two if youwere going on a tangent now, but
(14:28):
if you stick some money and youhad high interest, you could
actually have a thousand of eachtax-free potentially, whereas,
yeah, yeah potentially, butobviously, and as you've just
clarified, um, that is not thecase.
It's actually categorized thesame.
So you've got a thousand acrossall of them as your allowance,
right?
Fine, we're learning a lottoday.
Anything else that we feel areyou.
(14:50):
You feel that is worthmentioning whenever it comes to
taxation on crypto I mean,there's a lot to talk about,
really, isn't it?
Emily (14:56):
oh?
Dr James (14:56):
wow, we could, we could go on, we could go on
forever.
Okay, here's a fun question.
What in your experience helpingmembers of the public but also
dentists with this stuff, whatare the common pitfalls like?
What are the common things thatpeople run a file off that you
almost, when you see them on thetax returns, you almost roll
your eyes and you're like thisagain.
Emily (15:14):
So these are the things that we can watch out for uh, I
mean commonly people thinkingthat I won't find wallets that
they've not told me aboutnaughty, do that guys thinking
that maybe hrc will only beinterested in the transactions
that are in your centralizedwallet.
It's all the defy stuff.
They won't, they won't careabout that, they'll not find
that.
But we like, if I could find it, they can't.
(15:35):
So, um, basically, if it's, ifit's you put money into a, say,
a centralized exchange, that ifyou then money into a
centralized exchange, if youthen send that out to a DeFi
wallet, if I see some cryptoleaving your account, I'm going
to ask you where it's going.
If that's going to a DeFiwallet, I need that wallet
because you need to be able totrace absolutely everything
(15:56):
through.
The great thing about cryptoit's all there, it's all in the
blockchain, you can see it.
So, yeah, we just follow itthrough and just try and make
sure we can draw all the dots,basically, um, and not have any
unknowns.
Obviously, it can be quitedifficult when you have
thousands and thousands oftransactions, but that's why we
do our reviews and I thinkmostly are asking for it.
So it is really important thatyou do give them everything,
(16:18):
because it's just gonna you'regonna get penalized later down
the line if you've not actuallychosen not to give them
everything.
Dr James (16:24):
Well, as you say, I mean the address for your
wallets is called the publicaddress and you can go to a
block finder, I believe thewebsites are called and
literally just paste it in andyou can see all the transactions
to the address.
Yeah, it's all there.
It's all there, Apart fromcertain cryptos which say that
(16:44):
they can't be traced, but that'sdebatable.
But certainly the majority ofthem are right, Like the
majority of the common ones are,and, by the way, I'm definitely
not advocating that people golook for those cryptos.
Hmrc might've thought thatthrough and found a way as well.
Just making that super clear.
But there are some out therethat claim that.
Shall we say they claim it.
Any other pitfalls, any otherbiggies?
Emily (17:08):
um, I mean generally not not declaring is also a big one.
Um, because hmrc are kind ofgonna find you out.
Um, because so at the minute,um, the centralized exchanges a
lot of them are choosing toshare their data with HMRC and
there has been nudge lettersthat have gone out to people
that hold over a certain amountjust to say we know your whole
(17:30):
crypto.
This is your opportunity todisclose it.
So, absolutely, if you get oneof those letters, you need to
disclose it because they're onto you.
The penalties are a lot morelenient if you choose to then
disclose it rather than if youwait until they open a full
inquiry.
Then the penalties can be quitehefty.
So I definitely recommend doingit early.
If you've not had a nudgedletter but you've not disclosed,
(17:55):
definitely still you need to.
Again, if you do it willingly,the penalties are a lot less.
They can even be 0% if it's notover 12 months overdue.
So they have been pretty goodon the penalties as it stands,
but I think that's going tochange, particularly next year,
from the 1st of January 2026.
It's becoming mandatory forexchanges to share their data
(18:17):
with HMRC.
This is called the Crypto AssetReporting Framework and it's a
global thing, so countries arekind of choosing to opt into it.
So currently, 52 countries haveopted in to start from next
year, sharing their data and soshare with hmrc and all the
other kind of equivalents acrossthe board.
So, um, even if it's mcs thatyou need to be careful.
(18:38):
So once they have access tothat information, they're going
to start using it from january2027.
So you've got time, um, to getthings up to date.
But I definitely recommend youdo that because otherwise you're
going to get, they're going tofind the transactions because
they're all linked to you.
So, yeah, don't, don't leave itany longer don't dilly dally.
Dr James (19:00):
And just on that, emily.
Actually, what I was curious toask is if anybody wants to talk
to yourself about their cryptoassets, where are they best off
finding you?
Emily (19:09):
yeah, I mean on our website there's a lot of crypto
guidance, so um, the firm'scalled alexander and co, so you
can just google us and find ourwebsite and there's loads of
crypto pages on there, um, andyou can kind of ask to speak to
someone through there.
Or you can contact me directly,um, my email address is emilyk
at alexandercouk, so just feelfree to drop me an email.
(19:29):
Um, and, yeah, we can.
We can have a chat.
Generally, what we do is we canhave a um a 30 minute kind of
initial inquiry call which iscompletely free of charge, have
a chat through, see if even youneed to report anything um, and
then we kind of go from thereand get a plan together.
Sometimes it's just simple goback through and just get
everything up to date, althoughit can be a bit bit more
(19:50):
complicated, so it's just caseby case.
HMRC are clamping down on crypto whenever it comes to
our tax affairs.
So, in order to prevent runningafoul of this, we need to equip
ourselves with the knowledgeneeded to stay on the right side
of the law, and that's why I'mjoined today by a crypto expert
accountant who also deals withdentists, and we're going to be
(00:22):
getting into the ins and outswhat you need to know how crypto
is taxed and how to stay on theright side of the rules.
I'm also happy to share thatthere is free verifiable CPD
associated with this podcastepisode.
Whenever you finish the episode, all you have to do is click
the link in the podcastdescription.
It'll take you right through tothe Dentists Who Invest website
(00:43):
.
You'll be able to complete ashort questionnaire and, once
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable CPD certificate,
which is entirely free.
What that means is this podcastepisode will be able to
contribute towards yourverifiable CPD hours during this
learning cycle.
During this learning cycle, weneed to talk about not just
(01:08):
crypto, but specifically thetaxation aspect of crypto,
because it's been so long sinceI've done a podcast on this,
emily, do you think a good placeto start would be just to
simply state how crypto isusually taxed in the UK.
Is it any different from otherassets?
Emily (01:25):
Yeah, absolutely.
State how crypto is usuallytaxed in the uk.
Is it any different from otherassets?
Yeah, absolutely.
Um, so, in general, crypto istaxed based on existing
legislation.
So they've not kind of releasedany legislation that is
specific to crypto, uh, whichdid make it quite complicated
initially because they all theyhad to fit something that was
pretty complicated into existingrules, uh, which, yeah, makes
it a bit of a nightmare.
(01:46):
But essentially how it works isif you sort of trade one crypto
for another or cash out intoyour bank account, there may be
a capital gain there, so it'staxed on the capital gains tax
where you've got to swap, socapital gains tax the rates they
were previously 10 and 20percent, they're now 18 and 24
percent and it's based on any,basically any, profit you've
(02:10):
made.
Now the actual calculation ispretty complicated because it
follows the share legislation.
So, um, what it means is youmay think that you've made a
loss, for example, when in fact,for tax purposes, you've made a
loss, for example, when, infact, for tax purposes, you've
made a profit.
So we found a lot of peoplehave been completely thrown off
by the rules.
Luckily, there's some great taxcalculators out there which
(02:31):
help you to see how it's beencalculated.
So we often use Coinly, whichis kind of the biggest one.
There's a crypto tax calculator, which is also pretty useful,
where you can just kind of linkeverything up.
So that's a big one.
The capital gains tax Also someelements of tax under income
tax.
So things like stakingsometimes airdrops, depending on
(02:53):
what they are those tend to betaxed under income tax as other
income, so you'll pay the usualincome tax rates on those, but
you don't have to pay anynational insurance.
Dr James (03:09):
So it's just classed as other income on your tax
return.
There we go.
Okay, I've written on that one,and that's presuming that it's
all in per.
Just to really spell this out,that presumes that, uh, it's all
in a personal name, right, andif it's in a company, obviously
it would be well it'd becorporation tax if it was in a
company.
Yeah yeah, because I rememberand this is, this is one for the
audience right here I rememberone year oh, I can't remember
what year it was, in fact, Ithink it was.
I can't remember, anyway, itdoesn't matter and I was like,
(03:32):
okay, cool, I can sell 10,000 ofcrypto, whatever the old limit
was CGT limit, right.
And I was like, oh, you sell10,000, right, and you're fine
because you made 10,000 profitthat year, but it doesn't work
like that, right?
You have to know the amount ofcrypto you originally had and
(03:52):
the ratio of.
You'll probably explain itbetter than me.
How does it work?
Emily (03:57):
Yeah.
So if you say, bought a load ofcrypto in the past and then
you've sold it today and thenyou're not planning on making
any more sales in the next 30days, is how you'd expect to be
taxed.
It would be what you'vereceived for the sale of it all,
less what you paid for it.
What gets more complicated isif there's any transactions
within 30 days of you selling it, because essentially you are
(04:20):
deemed to have re-bought thesame asset.
So you may then not have a gainwhen you thought you previously
would have done so.
It almost takes a futurepurchase as the cost rather than
a previous one.
So that's where it can get verycomplicated.
And also, if you've receivedstaking income, for example in
the same currency, then it'lltake the market value on the
(04:41):
date you receive it and it willtax that under income tax, but
that will also be your cost basefor when you then sell it.
So that is really catching alot of people out, because
they'll receive the income betaxed when it's worth a certain
amount.
If that value then falls andthey haven't sold it, they're
basically going to be selling itwhen it's worth less and
(05:04):
they've had to pay tax when it'sworth way more, so it's it can
really kind of it's it's.
I've seen a lot of peoplegetting caught out by it.
So I always tell people youshould cash out the tax element
if you ever receive any income,also if you're making any any
sort of disposals in general.
Because you have to pay yourtax in pounds.
You can't pay in crypto, so youneed to get the money.
Have to pay your tax in pounds.
(05:24):
You can't pay it in crypto, soyou need to get the money out to
pay it.
So don't just leave it in therethinking, oh, it might go up
again, like you need to pay thetax, so you should get it out,
so that's kind of why I alwaysrecommend, yeah, 100%, because
that can massively catch peopleout, especially if they sell and
then they buy back in and thenthe value goes down.
Dr James (05:46):
You're reliable, buy back in and then the value goes
down.
You're at, you're liable on auh, a great deal, or potentially
a great deal of tax with moneythat you may not have liquid and
you might find yourself sellinga lot of your crypto because
obviously it's went down, so,unfortunately, you need to sell
more to get the same flippingmoney out.
Watch out for that one, guys,anyway.
Um, so yeah, we've covered howcrypto works in relatively
simple situations, as in whenwe're just buying and selling
(06:08):
Bitcoin or some of the altcoinsas well, because, it's well,
they're all taxed in the sameway, in that sense, when you're
buying and selling.
Of course, this is one to watchout for for the traders in the
audience, because you just haveso many transactions flying
around and they're really hardto keep on top of.
You mentioned coinly just asecond ago, back when I used to
(06:30):
use uh how can we say this?
Uh apps and calculators for thetax side of things.
They were really, really,really.
Not that they were quiteprimitive, let's just say that
and they didn't really work thatwell.
So you you advocate nowadaysthat that's the best way to do
it.
Emily (06:46):
I know we've named coinly , but some sort of crypto tax
calculator I mean when thenumber of traction transactions
involved it's borderline,impossible to do it manually.
You need to use some sort ofsoftware for it.
So coinly has it's definitelyimproved a lot since it first
kind of instead, we've used itfor years now um, and we've, we
kind of we're in communicationswith them and if there's any
ever any issues, we kind ofwe've used it for years now and
we're kind of wearingcommunications with them and if
there's ever any issues, we kindof communicate that back.
(07:08):
So they're always looking toimprove things and we just find
it's good because you can linkyour wallets with an API and
pull everything in.
So you've got all the datathere.
What it's not always perfect atis like tracking it correctly,
getting the right tags on things, matching up lines.
So we always will do a review ofsomeone's account before we put
(07:29):
anything into a return, whichis something I think a lot of
accountants aren't doing becausethey're just relying on it
because of the lack of knowledgearound it.
So we have a team that willactually look through the
account and ask you questions ifthere's anything that looks
like it's sticking out.
And I've dealt with some HMRCinquiries and found HMRC are
asking for the Coily reports.
They're asking for thesupporting data, so they will be
(07:51):
looking for the same things weare.
So we're hoping to kind ofaddress the issues before they
even get to HMRC.
So if they do ask any questions, we've already got the answers.
Dr James (08:02):
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Okay, brilliant, so we'vecovered how crypto is taxed
typically.
You mentioned staking earlier,yeah.
(09:10):
Which is something that a lot ofcrypto aficionados participate
in, shall we say, and the way wecan explain staking in a simple
sense, or in simple terms, iskind of complicated.
You need to know a little bitabout how crypto works to go
into a lot of detail, but theway it works is you basically
(09:31):
place a certain amount of acrypto in a ring fenced wallet
and then, in return for thatbeing the case, you get paid a
yield on that crypto in thecrypto that you staked, or
usually in the format of thecrypto that you staked is the
simplest way I can explain it,so hopefully everybody was
(09:51):
following that one.
And how is that taxed then?
Emily (09:55):
so when you do that initial transfer in that's you
still own that.
You're not disposing of it, sothat's fine.
There's no tax implications ofthat.
The only tax is when you thenreceive the staking rewards back
, so that is taxed as otherincome on your tax return.
So that'll be.
You pay income tax but nonational insurance contributions
.
So it's either 20, 40 or 45,just depending how much you earn
(10:18):
um is, and you also have athousand pound trading allowance
which you can utilize againstit.
So if you've not utilized thatanywhere else when you return um
which it depends on what you'redoing but if you've not
utilised it, then basically yourfirst £1,000 of income you earn
from staking won't get taxedbecause you've got this
allowance you can offset againstit.
Dr James (10:39):
Interesting, and is that the same allowance that you
get whenever you sell stuffonline online?
You sell products online, or isthat a different allowance?
Emily (10:48):
yes, you're, is that like the?
Dr James (10:50):
other income one right .
So if you, if you have a smallside gig business and you sell
things online and you've alreadymade a thousand over there,
it's actually going to push yourstaking potentially into your
income, yeah, into being taxable, yeah and it's also going to be
um the case that potentiallythat it may push your marginal
(11:13):
income into that bracket as well, from your job too yeah, yeah,
it could, and if it goes so high, it could even make you lose
your personal allowance um.
Emily (11:23):
So that's kind of you get taxed even more.
So we have seen it.
Um, yeah, and also it's worthnoting because a lot of people
that invest in crypto are quiteyoung um that if you have a
student loan, student loanrepayments also take account
staking income.
So, yeah, that that mean ninepercent will come to be taken
from your staking income.
So if you're a higher ratetaxpayer, you'd have 40 income
(11:48):
tax plus nine percent um studentloan.
So it's almost half yourstaking is already gone um, and
if you've not sold it for aprofit, then it's not looking
good yikes, okay, wow, I'mlearning a lot today.
Dr James (12:00):
I didn't know that.
That was how they um, theydealt with staking.
And, of course, another thingto mention is we've dealt with
staking.
Slight distinction between whatI'm about to talk about now and
staking, although on the faceof it it mightn't seem that
apparent.
But there is also high interestcrypto bank accounts so you can
stake your stable coinsinverted commas which are
(12:23):
cryptos that are tied to thevalue of certain fiat currencies
or real world currencies.
So a common one is US dollarcoins, so it'll always be the
equivalent of the US dollar.
It's pegged to its value, soone of these cryptos will equal
a dollar, and apparently theyhave all these dollars in
reserve as well somewhere.
So they say anyway, at leastthat's the claim, um, so when
(12:44):
you stake your dollar coins in ahigh interest bank account,
then I believe there's slightlydifferent rules still, because
that interest, have I got thatright?
Emily (12:57):
it wouldn't be bank interest if it's not actual
currency.
So as it stands, a hmlc is notrecognising stable coins as
currency, so it essentiallywould fall under the same thing
as staking.
So it would be other income.
So it would fall under thatrather than on the bank interest
section of your returnno-transcript.
Dr James (13:46):
So it's good that we've had that update, because
obviously, if it was categorizedas interest, there's different
rules on that.
Still, it doesn't necessarilycount towards your income, does
it it?
Emily (13:56):
is still income.
It just lands in a separatearea of your return.
There's a different allowanceavailable, so you probably won't
get the £1,000 tradingallowance which is kind of the
key bit.
Dr James (14:06):
Right, because I think not to digress too much, I
think, whenever it's interest,if you're in the basic tax rate,
you have a £1,000 allowance andif it's in the higher then it
becomes £500.
But it would be categorizeddifferent, differently obviously
.
So you might have two if youwere going on a tangent now, but
(14:28):
if you stick some money and youhad high interest, you could
actually have a thousand of eachtax-free potentially, whereas,
yeah, yeah potentially, butobviously, and as you've just
clarified, um, that is not thecase.
It's actually categorized thesame.
So you've got a thousand acrossall of them as your allowance,
right?
Fine, we're learning a lottoday.
Anything else that we feel areyou.
(14:50):
You feel that is worthmentioning whenever it comes to
taxation on crypto I mean,there's a lot to talk about,
really, isn't it?
Emily (14:56):
oh?
Dr James (14:56):
wow, we could, we could go on, we could go on
forever.
Okay, here's a fun question.
What in your experience helpingmembers of the public but also
dentists with this stuff, whatare the common pitfalls like?
What are the common things thatpeople run a file off that you
almost, when you see them on thetax returns, you almost roll
your eyes and you're like thisagain.
Emily (15:14):
So these are the things that we can watch out for uh, I
mean commonly people thinkingthat I won't find wallets that
they've not told me aboutnaughty, do that guys thinking
that maybe hrc will only beinterested in the transactions
that are in your centralizedwallet.
It's all the defy stuff.
They won't, they won't careabout that, they'll not find
that.
But we like, if I could find it, they can't.
(15:35):
So, um, basically, if it's, ifit's you put money into a, say,
a centralized exchange, that ifyou then money into a
centralized exchange, if youthen send that out to a DeFi
wallet, if I see some cryptoleaving your account, I'm going
to ask you where it's going.
If that's going to a DeFiwallet, I need that wallet
because you need to be able totrace absolutely everything
(15:56):
through.
The great thing about cryptoit's all there, it's all in the
blockchain, you can see it.
So, yeah, we just follow itthrough and just try and make
sure we can draw all the dots,basically, um, and not have any
unknowns.
Obviously, it can be quitedifficult when you have
thousands and thousands oftransactions, but that's why we
do our reviews and I thinkmostly are asking for it.
So it is really important thatyou do give them everything,
(16:18):
because it's just gonna you'regonna get penalized later down
the line if you've not actuallychosen not to give them
everything.
Dr James (16:24):
Well, as you say, I mean the address for your
wallets is called the publicaddress and you can go to a
block finder, I believe thewebsites are called and
literally just paste it in andyou can see all the transactions
to the address.
Yeah, it's all there.
It's all there, Apart fromcertain cryptos which say that
(16:44):
they can't be traced, but that'sdebatable.
But certainly the majority ofthem are right, Like the
majority of the common ones are,and, by the way, I'm definitely
not advocating that people golook for those cryptos.
Hmrc might've thought thatthrough and found a way as well.
Just making that super clear.
But there are some out therethat claim that.
Shall we say they claim it.
Any other pitfalls, any otherbiggies?
Emily (17:08):
um, I mean generally not not declaring is also a big one.
Um, because hmrc are kind ofgonna find you out.
Um, because so at the minute,um, the centralized exchanges a
lot of them are choosing toshare their data with HMRC and
there has been nudge lettersthat have gone out to people
that hold over a certain amountjust to say we know your whole
(17:30):
crypto.
This is your opportunity todisclose it.
So, absolutely, if you get oneof those letters, you need to
disclose it because they're onto you.
The penalties are a lot morelenient if you choose to then
disclose it rather than if youwait until they open a full
inquiry.
Then the penalties can be quitehefty.
So I definitely recommend doingit early.
If you've not had a nudgedletter but you've not disclosed,
(17:55):
definitely still you need to.
Again, if you do it willingly,the penalties are a lot less.
They can even be 0% if it's notover 12 months overdue.
So they have been pretty goodon the penalties as it stands,
but I think that's going tochange, particularly next year,
from the 1st of January 2026.
It's becoming mandatory forexchanges to share their data
(18:17):
with HMRC.
This is called the Crypto AssetReporting Framework and it's a
global thing, so countries arekind of choosing to opt into it.
So currently, 52 countries haveopted in to start from next
year, sharing their data and soshare with hmrc and all the
other kind of equivalents acrossthe board.
So, um, even if it's mcs thatyou need to be careful.
(18:38):
So once they have access tothat information, they're going
to start using it from january2027.
So you've got time, um, to getthings up to date.
But I definitely recommend youdo that because otherwise you're
going to get, they're going tofind the transactions because
they're all linked to you.
So, yeah, don't, don't leave itany longer don't dilly dally.
Dr James (19:00):
And just on that, emily.
Actually, what I was curious toask is if anybody wants to talk
to yourself about their cryptoassets, where are they best off
finding you?
Emily (19:09):
yeah, I mean on our website there's a lot of crypto
guidance, so um, the firm'scalled alexander and co, so you
can just google us and find ourwebsite and there's loads of
crypto pages on there, um, andyou can kind of ask to speak to
someone through there.
Or you can contact me directly,um, my email address is emilyk
at alexandercouk, so just feelfree to drop me an email.
(19:29):
Um, and, yeah, we can.
We can have a chat.
Generally, what we do is we canhave a um a 30 minute kind of
initial inquiry call which iscompletely free of charge, have
a chat through, see if even youneed to report anything um, and
then we kind of go from thereand get a plan together.
Sometimes it's just simple goback through and just get
everything up to date, althoughit can be a bit bit more
(19:50):
complicated, so it's just caseby case.
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