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

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Sam Adams
Written by
Sam Adams,
Head of Content

First published: 7th March 2022. Most recent update: 20th Feb 2023

The UK 2022/23 tax year comes to an end on 5th April. Following the government's Autumn Statement in November 2022, this is also the final year where the £12,300 capital gain allowance will apply, as it will be cut to £6,000 for 2023/24 and again to £3,000 for 2024/25.

Here’s our end of year checklist to help you maximise your tax efficiency and make the most of your capital gains allowance while you still can.

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 before it reduces for 2023/24

UK tax payers are entitled to an annual CGT allowance. For the 22/23 tax year this is £12,300. As mentioned above this will dramatically reduce over the next two years. The allowance does not roll over so if you don’t use it all within the current tax year, it’s lost. Especially because of the reduction, you might consider strategically disposing of some of your assets to make full use of this tax free allowance before the 5th April.

If you plan on “cashing out” your crypto soon, then now is a good time to think about how you could split your disposals across tax years rather than selling it all in one go, to make the most of your capital gains allowance and lower your tax bill in the long run.

⚠️ Don't forget! Various disposals (not just selling crypto for £'s) count towards your total capital gains. Our crypto tax calculator can help you keep track of your gains and estimated tax due throughout the year, making it easy to optimise your tax, make use of your allowances and put a plan in place.

3. Make use of your spouse’s allowance

Illustration of a man holding a gift and coins trailing out of it, a woman catches a bitcoin. In the background a giant heart.

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).

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

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

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 any 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. Find out more in this guest blog by crypto tax expert Louise Lane.

Now is the time to check your capital gains allowance!

As we approach the end of the current tax year and wave goodbye to the £12,300 threshold, 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!

Sound a little nerdy?! If you’re not already a Recap user, make sure to check out the app to discover how it unites trading and taxes so you can concentrate on the fun stuff!

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.

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