Tuesday, 20 July 2021

Open Banking & Crypto currency - Capital Gains Tax

In the 2019/2020 & 2020/2021 UK tax years, I bought and sold crypto currencies; I happened to make a little money out of it thru no skill of my own.  "A rising tide lifts all boats".  It has been bothering me so I looked up how taxing crypto works and it falls under Capital Gains. 

UK individuals get £12,300 I am well below the threshold for owing HMRC additional tax.  I still need to report my gains on my SA100/Self Assessment with HMRC using SA108 for reporting Capital Gains.  There is also a great initiative Payment Services Directive 2 (PSD2)/Open Banking offered by companies like TrueLayer that provide API's to get current account statements/transaction using OAuth2 permissions.  PDS2 is pretty useful for anti-money laundering (AML), Know Your Customer (KYC) and fair amount more that I'm not an expert in working with.

It is worth using this capital gains allowance if you can get solid returns off applicable assets such as shares or cryptocurrency.

"When you dispose of cryptoasset exchange tokens (known as cryptocurrency), you may need to pay Capital Gains Tax.

You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance. The Capital Gains tax-free allowance is: £12,300"

References

Payment Services Directive 2 and Open Banking | UK Finance

https://www.gov.uk/capital-gains-tax/allowances

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