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Cryptoassets continue to plummet as economic and inflationary pressures continue to challenge global financial markets. Further falls are expected as the bear market tightens its grip. But UK cryptoasset investors can ‘bank’ losses with the tax authorities and offset against future gains, says accountants, business and financial advisers Kreston Reeves.

For the last few years, crypto investors have had to worry about tax liabilities on sale following dramatic increases, but now the tide has turned. Few investors realise that losses can be banked with HMRC and offset against future gains.

The sale of cryptoassets is seen by HMRC as a disposal attracting capital gains tax payable at 20%. However, when a sale is made at a loss, which will be a reality for many investors, those losses can be used to offset future gains on other investments, such as investment property.

“Losses need to be claimed within four years of the end of the tax year in which they were realised, meaning losses made in May 2022 must be claimed by 5 April 2027,” explained Paul Webster, a Director in the Private Client Tax team at Kreston Reeves. “Investors may also find the cost of disposing of some cryptoassets will be more than the value of those assets and may, understandably, choose to do nothing. Yet, even if an asset is not sold, it is possible to bank a ‘negligible value claim’ with HMRC.”

HMRC guidance allows claims to be made when a cryptoasset becomes worth ‘next to nothing’. Negligible value claims do not require the crypto asset to be sold and losses can be carried forward indefinitely.

“With the EU looking to ban anonymous cryptoasset transactions and the Financial Action Task Force aiming to tighten money laundering regulations for exchanges and custodians, tax authorities will inevitably have enhanced data on individuals making gains. With that in mind, investors would do well to bank losses now,” said Webster.

The taxation of cryptoassets, particularly in relation to other income and assets, is complex. Investors should always take advice.


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Graeme Andrew

Graeme Coles-Andrew

Graeme is Head of Technology at the Armchair Trader. He has worked in online financial investment publishing since 2000 as a website developer, advertising operations manager, data scientist and all-round go-to guy for online technical solutions.

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