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UK Tax

5 things to do with your crypto before the end of the tax year

How to maximise your tax efficiency in the final days of the 2021/22 UK tax year

Samantha Adams

Mon Mar 07 2022

The UK 2021/22 tax year comes to an end on 5th April. Here’s our end of year checklist to help you maximise your tax efficiency.

1. Dispose of capital losses

Got losses? Don’t just sit and cry over them in the hope your luck might change - make a disposal and use your capital losses to offset capital gains. Did you know? HMRC allow you to carry capital losses forward to use against future gains? Just make sure you declare them within 4 years of the end of the tax year in which the loss was realised.

2. Utilise your capital gains tax allowance

UK tax payers are entitled to an annual CGT allowance. For the 21/22 tax year this is £12,300. This exemption does not roll over so if you don’t use your allowance within the tax year, it’s lost. You might consider strategically disposing of some of your assets to make full use of this tax free allowance before the 5th April.

Plan on “cashing out” your crypto? Think about how you could split your disposals across tax years to make the most of your allowance and lower your tax bill.

Don't forget! Various disposals (not just selling crypto for £'s) count towards your total capital gains. App’s like Recap can help you keep track of your gains throughout the year, making it easy to optimise your tax.

3. Make use of your spouse’s allowance

In the UK, spouse transfers are regarded as no-gain, no-loss in terms of tax. This means that you could gift crypto to your spouse tax free, and they can then make a disposal to utilise their annual CGT allowance. (They inherit your original acquisition cost).

Tip: Keep separate accounts to ensure clear ownership of the assets in case of a tax audit and to make record keeping easier.

Great savings can be made by planning your finances as a couple, especially if the lower earning spouse pays a more favourable tax rate.

4. Reset your cost-basis

Make use of your CGT allowance by realising some gains by the end of the tax year, then later re-acquire your assets to reset your cost basis higher to lower the tax impact of future disposals.

Sounds sneaky - is it legit? Yes, however, you can’t buy back the same asset straight away. HMRC’s 30 day rule is in place to prevent investors selling and repurchasing assets in a short period of time, so you would need to wait 30 days after disposal before buying the same asset again. Don’t want to wait? Alternatively, you could buy another asset immediately, ideally one highly correlated to the price of the original.

5. Tax loss harvesting

A similar approach to above but making use of your capital losses… Make a disposal to realise your losses and use them to offset your gains. Then re-acquire the disposed asset to reset your cost basis higher, making future gains more tax efficient. Again, HMRC’s 30 day rule would apply so you need to either wait 30 days before buying the same asset again or buy an alternative asset.

Now is the time!

As we enter the run up to the end of the current tax year, now is the time to take advantage of your tax allowances before they are lost forever. It’s also a great time to start planning your tax strategy for next year!

RECAP-CAPITAL-GAIN If you’re not already a Recap user, make sure to check out the app to discover how it can help you to keep track of your crypto assets and capital gains.

Disclaimer: This blog is intended as a generic informative piece. This is not accounting or tax advice that can be relied upon for any UK individual’s specific circumstances. Please speak to a qualified tax advisor about your specific circumstances before acting upon any of the information.