UHY Ross Brooke Chartered Accountants

Crypto Day Trading – Putting the record straight

crypto specialist accountants

Day traders in crypto assets should already be mindful of the high risk and the possibility of losses, but may not be aware of the tax liabilities also being incurred on profits. An added risk to your whole crypto adventure is the potential of a tax investigation by HMRC or even a fine for non-payment of UK tax.

Each time you make a trade, however many times a day you trade, you will be generating profits or losses. As for your own record keeping, with the sheer quantity of transactions involved, the profits and losses, and cross-platform currency conversions, it can soon become an administrative nightmare.

Records that you must be able to show HMRC include:

  • Transaction date
  • Type of crypto asset
  • Quantity of units bought or sold
  • Currency conversions across exchanges
  • Transaction value in £GBP
  • Profit or loss in £GBP

While we do not recommend any particular trading platform, exchange, wallet or crypto tax software (eg Koinly), we strongly encourage our crypto clients to keep very detailed records of all their crypto trades. It is also imperative that you download your trading records regularly from your exchanges in case they lose or delete them.

“But I don’t earn enough to pay tax”

It’s easy to think that HMRC will not be interested in you if you are only dabbling in crypto day trading, but many exchanges are now legally required to report holdings and client meta details to HMRC. Even if you think that you’re not liable for UK tax, we’d recommend you read further, https://www.ross-brooke.co.uk/what-we-do/crypto-tax-specialist-uk/ and then seek the advice of an accountant who has experience in crypto tax, such as our team at UHY Ross Brooke.

Don’t put it off

Don’t put off getting your records in order, and if you’ve been trading crypto assets in the tax year 2020/2021, you need to complete your self assessment by 28th February 2022 (normally 31st January but date extended due to Covid for this year only).

If you’ve only been crypto trading since April 2021, you’ll need to have your records ready for self assessment by 31st January 2023, but it’s wise not to leave it to the last minute.

“What taxes should I pay, and how much?”

It depends, and that’s why it’s worth talking to us. Because we know about tax, we can also help you to reduce your tax bill and take away the worry of staying on the right side of the law.


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