Examples of Tax Payable on Bitcoin Profits

Bitcoin Tax Examples

Estimated reading time: 4 minutes

Bitcoin and other cryptocurrencies have increased significantly in value over the last few years. At the time of writing on Thursday 11th February 2021, a Bitcoin is priced at $45,531.

As a result of this significant growth, many investors are looking to cash in on some of their accumulated profits.

The tax on bitcoin in the UK will typically be Capital Gains Tax. For more information on this and how to calculate your profits see our blog do you have to pay taxes on Bitcoin?

Below, we have provided some examples showing the amount of tax that may payable on your Bitcoin profits.

NOTE: For the purpose of these examples we have referred to all cryptocurrencies as Bitcoin as this is the most well known.

My Bitcoin profits are £3,000. Do I need to pay any tax?


UK tax rules allow individuals to make profits on asset sales of up to £12,300 before paying tax. The £12,300 is the capital gains tax allowance for the tax year 2020/21.

Based on profits of £3,000, which are below the current allowance, no capital gains tax would be payable.

This calculation assumes that no other potential taxable gains are received in the tax year.

The small gain would still need to be reported, if you are already registered for self-assessment and the total value of the asset sales was more than 4 times the allowance – i.e sale value of over £49,200 in tax year 2020/21.

My Bitcoin profits are £30,000. Do I need to pay tax and how much would be due?


As mentioned above an allowance of £12,300 is available per tax year.

Assuming that there are no other gains in the tax year, the allowance of £12,300 would be available. As a result, the amount chargeable to capital gains tax would be £17,700 (Calculation £30,000 profits less £12,300 allowance).

The rate of tax payable is 10% for basic rate taxpayers and 20% for any amount above the basic rate. Therefore the capital gains tax payable on the above would be between £1,770 and £3,540.

Example working:

An individual with a salary of £40,000 and no other income would pay the following capital gains tax on the above:

The first £10,000* is taxed at basic rate of 10%, giving tax of £1,000
The remaining £7,700 is taxed at a rate of 20%, giving tax of £1,540
The total capital gains tax owed in this example would be £2,540

*In tax year 2020/21 earnings can be up to £50,000 at basic rate. As a result with a salary of £40,000 it leaves £10,000 taxable at the lower 10% rate.

My Bitcoin profits are £300,000. How much do I need to pay in capital gains tax?


Should you be one of the very lucky individuals to have bought Bitcoin early, profits in this region is very much a possibility. The bad news is that HMRC will want their share.

With profits this high, the simplified calculation is to multiply your profits by 20% to get a rough tax estimate. The actual tax liability will be slightly below this amount.

Example working:

For simplicity, we will use the same individual as used above with the £40,000 salary.

The capital gains tax allowance of £12,300 is still available. As a result this reduces the gain down to £287,700.

The first £10,000* is taxed at basic rate of 10%, giving tax of £1,000
The remaining £277,700 is taxed at a rate of 20%, giving tax of £55,540
The total capital gains tax owed in this example would be £56,540, which as we stated above is slightly below 20% of the £300,000 profits.

*In tax year 2020/21 earnings can be up to £50,000 at basic rate. As a result with a salary of £40,000 it leaves £10,000 taxable at the lower 10% rate.

TAX TIP – Be aware of the 30 day repurchase rule. The profit calculation will change (for better or worse) if an individual purchases the same type of coin within 30 days of the sale. For more information see the pooling rules covered in our do you have to pay taxes on bitcoin blog?

Further Information on Bitcoin Taxes

IMPORTANT! The figures are to be used as a guide only. They are based on the tax rates and allowances for 2020/21. They don’t consider the effects of other gains in the tax year, other losses in the tax year, or even tax losses carried forward from previous years.

Should significant taxes be a possibility, it is important to obtain professional advice. Should you wish to receive a quote from ourselves for this service, please request a quote!

DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer

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