In the UK, for tax purposes, it is essential to maintain comprehensive and accurate records of all your cryptocurrency transactions. These records are crucial for correctly calculating any potential tax liabilities, such as Capital Gains Tax or Income Tax. Here’s what you should keep track of:
Transaction Dates: Note the dates on which you acquired or disposed of the cryptocurrency.
Values in Pounds Sterling: For each transaction, record the value in GBP at the time of the transaction. This includes purchase prices, sale prices, or the market value at the time of an exchange.
Transaction Receipts: Keep all receipts or records of your cryptocurrency transactions, such as broker statements, trading logs, or digital wallet records.
Type of Cryptocurrency: Document the specific type or name of the cryptocurrency involved in each transaction.
Nature of Transaction: Note whether each transaction was a purchase, sale, exchange, or gift.
Wallet Addresses: It may be useful to record the wallet addresses used for transactions, especially for identification purposes.
Associated Costs: Record any costs incurred for each transaction, like transaction fees or brokerage fees. These can often be deducted from capital gains to determine the net gain.
Year-End Cryptocurrency Holdings: At the end of each tax year, record the quantity and value of all your cryptocurrency holdings.
Mining or Business-Related Financial Statements: If you’re involved in cryptocurrency mining or business activities, keep detailed financial records, including income, expenses, and any assets.
Lost or Stolen Cryptocurrency: Maintain records of any cryptocurrency that is lost or stolen, including the circumstances of the loss or theft.
Keeping these records will assist in accurately calculating any tax liabilities and will be invaluable in case of an enquiry or audit by HMRC. Tax regulations can be complex and change over time, so it’s advisable to consult with a tax professional who is knowledgeable about cryptocurrency for specific advice.