How To Pay Less Tax On Crypto (Legally) In 2025

Matt | Personal Finance

How To Pay Less Tax On Crypto (Legally) In 2025 #CryptoTax2025 #capitalgainstax #bitcoin   Thinking about buying or selling cryptocurrency in 2025? Before you make a move, watch this guide to UK crypto taxes — covering everything you need to know to save money on your crypto gains and reduce your tax   In this video, I break down how crypto assets like Bitcoin, Ethereum, Solana, XRP and other cryptocurrencies are taxed in the UK — including capital gains tax (CGT) on investments, income tax on mining and staking, and smart ways to minimise your crypto tax bill   ⚠️ Important for UK Crypto Investors: With the UK tax year ending on 5 April, now is the time to understand your obligations and avoid unnecessary taxes on your crypto profits!  Related Phrases:  How To Pay Less Tax On Crypto (Legally) In 2025, How The Rich Avoid Paying Taxes, Proven Wealth-Building Strategies, How To Pay Less Tax, How To Reduce Capital Gains Tax, How To Reduce Tax On Investments, How Much Tax Do I Have To Pay, How To Complete A Tax Self-Assessment, What Are The Savings Tax, Income Tax And Capital Gains Tax Thresholds, How To Pay Tax Online, How To Pay Taxes on Crypto, What Is The Tax On Cryptocurrency   #tax  #personalfinance #moneytips #taxplanning #cryptocurrency #investing #bitcoin

Transcript

00:00Following the crypto market's growth after President Trump's election at the end of last

00:04year, we've recently experienced a major sell-off event in the first couple of months of 2025.

00:10And with that, investors are also realizing profits. If you're selling cryptocurrency to

00:16realize a gain, then you need to know what taxes are payable, how much tax you might need to pay,

00:22and ways to legally pay less tax. And we'll cover all three of these topics on this video.

00:27I know personally just how painful tax can be. You've been riding out the ups and downs in the

00:32market. You finally have gains that you want to realize, and then after all of that, you get taxed.

00:38But it's important to understand the tax rules so you can try to mitigate and keep as much of your

00:43gains as possible. If you're new to this channel, I'm Matt. I've been a finance consultant for over

00:4810 years. I now run my own company, and on this channel, I talk all things personal finance.

00:54So let's start with what taxes typically apply. The first tax to consider is income tax. For

00:59example, if you receive tokens in exchange for employment, then income tax and national insurance

01:04tax applies. Income tax can also apply if you carry on a trade in crypto assets. So crypto staking,

01:12crypto mining can fall into this category. You can currently qualify for a £1,000 tax-free allowance

01:17for trading income, which means that you can earn £1,000 from these activities and be exempt from

01:23income tax and national insurance tax up to that threshold. The most common tax on gains from crypto

01:30assets is capital gains tax. This is due when you dispose of crypto assets. For example, selling crypto

01:36for cash, swapping one crypto for another, using crypto to pay for goods and services, or giving crypto

01:44to someone other than your spouse or civil partner. If any of these situations apply, then you need to

01:49calculate your gain or loss on disposal of your crypto assets. Let's go through an example. John

01:55purchased 5,000 XRP tokens at 50p per token, giving a total cost of £2,500. The market value at the

02:04time John sells is £2 per token, meaning a total sale value of £10,000. The sale and purchase incurs

02:12transaction fees of 0.1%. So to work out the amount of capital gains tax due, you take the total sale

02:19value of £10,000 minus the cost of purchasing the crypto assets at £2,500 minus the purchase and sale

02:28transaction fee costs, which when combined equals £12.50. This gives you a total gain of £7,487.50.

02:37Each person in the UK gets a £3,000 annual capital gains tax exemption. That means that John can

02:44deduct this from his total gains, giving a total taxable gain of £4,487.50. At the autumn budget

02:53last year, the Chancellor announced that capital gains tax rates on assets would increase from 10%

02:59to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. So that means if John

03:07was a basic rate taxpayer, he would have to pay £807.75 of capital gains tax. And if he was a

03:14higher rate taxpayer, he would have to pay £1,077. Something to consider when you're doing your tax

03:21calculation is that there are going to be different scenarios for the cost basis to use based on how you

03:27bought and sold your crypto assets. For example, you'll have a different cost basis if you buy and

03:32sell the same cryptocurrency on the same day versus purchasing over multiple days and at different

03:38price points, which is where you calculate an average cost for a pool of assets. Depending on your

03:44situation, the HMRC website has guidance on what cost basis to use. So after covering how to calculate

03:50tax, what are the ways that you can save on tax? The first way is to maximise the £3,000

03:56annual capital gains tax allowance that you have each personal tax year. For those thinking about

04:02selling crypto assets in the short term, one thing to consider if you haven't used up your capital

04:07gains tax allowance is selling a portion of assets to realise gains up to £3,000 prior to the 5th of

04:14April 2025 and then selling another portion of assets after the 6th of April to go against the £3,000

04:21tax allowance in the next personal tax year. For example, if you had a £6,000 gain and you sold

04:28and realised all of that gain prior to the 5th of April, you'd have to pay £540 if you're a basic

04:34rate taxpayer and £720 if you're a higher rate taxpayer. Whereas if you sold and realised a gain

04:41of £3,000 prior to the 5th of April and a further £3,000 after the 6th of April, the no capital gains

04:49tax would be due as it would be within your tax allowance for each personal tax year. The second way

04:54to reduce your tax is to utilise the spouse allowance. If you live with a spouse or civil partner, you can

05:01transfer assets on a no win, no gain basis. So you could transfer crypto assets to them that give rise to

05:08a £3,000 gain. And then when they receive the crypto assets tax free, they could sell it and use

05:14all of their capital gains tax allowance. And you could do the same so that combined you have £6,000

05:20of gains sheltered from tax each tax year. The third way to reduce tax is to make sure that you claim

05:26all of the costs associated with your crypto transactions, such as fees for buying, selling

05:32and transferring crypto assets. By including this in your tax calculation, it helps to ensure that

05:38you're paying as little tax as possible on your asset gains. And the final point is capital losses.

05:43If you have crypto asset sales, which were loss making this year, you can offset them against gains

05:49that you've made. So if you sold and realised a loss of £2,000 on Bitcoin, but you realised a gain of

05:56£3,000 on XRP, then you can offset the Bitcoin loss against the XRP gain to reduce the amount of tax

06:03that you need to pay. So that wraps up four ways that you can reduce tax. If you've not done a

06:08self-assessment tax return before, you can see the details on the HMRC website, including how to

06:15register to file a tax return and also the dates by when it needs to be completed by. Taxation of

06:20crypto assets is complex. With the legislation constantly changing, it's worth speaking to a tax

06:26advisor to make sure that you're not overpaying on tax. This video is for educational purposes and

06:32not tax advice. If you found the video helpful, please do subscribe to my channel, give the video

06:38a like and I'll see you on the next video.

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