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Article by GoSimpleTax

In October 2021, HMRC was reportedly planning to send out “nudge letters” to holders of cryptocurrency (also called cryptoassets or just crypto), reminding them to check that they were reporting correctly and paying the required amount of tax.

Obviously, HMRC wants to prevent tax underpayment by the 2.3m people in the UK now believed to have crypto holdings. You may be among them and want to be sure that you’re reporting properly and paying the right amount of tax. Or you could be thinking about investing in cryptocurrency and want to know what your obligations would be regarding reporting and paying tax.

This guide explains:

• What cryptoassets and cryptocurrency are.
• When cryptocurrency is subject to Capital Gains Tax.
• When cryptocurrency is subject to Income Tax.
• What records you need to keep for tax purposes.
• How to report crypto gains or income.

What are cryptoassets/cryptocurrency?

HMRC defines cryptocurrency/cryptoassets as: “Cryptographically secured digital representations of value or contractual rights that can be transferred, stored and traded electronically.”

Chances are you’ve heard of Bitcoin, the world’s best-known and most widely held cryptocurrency. More than 60% of UK cryptocurrency investors have Bitcoin holdings, but other examples include Ether, Litecoin and Ripple.

Cryptocurrencies are digital assets, they’re not physical currency. You can’t buy things in the shops with them and they have no inherent value, they’re worth whatever someone is willing to pay for them. A cryptotoken is a denomination of a particular cryptocurrency and they each have different values. As with other assets, cryptocurrency value can go up or down.

Cryptocurrency is bought and sold via secure peer-to-peer online networks or exchanges. According to HMRC, the tax treatment of cryptocurrency depends on its nature and use. Basically, if you’re given crypto or earn income from crypto trading, it can be subject to Income Tax. If you dispose of crypto by selling, exchanging or giving it away, it can be subject to Capital Gains Tax.

When is cryptocurrency subject to Capital Gains Tax?

Obviously, people invest in cryptocurrency hoping that its value will increase over time. If it does, you make a gain, that’s why Capital Gains Tax can be payable if you dispose of cryptocurrency tokens by:

• selling them
• exchanging them for other cryptoassets
• using them to pay for good or services
• giving them away (unless it’s to your spouse or partner) or
• donating them to charity.

Your gain is the difference between how much you bought the crypto for (including any transaction fees) and sold it for. If someone gives you cryptocurrency tokens upon which you later need to pay tax, to work out your gain, you must find out their market value when they became yours.

How much Capital Gains Tax is payable on cryptocurrency?

After your total taxable gains go over the Capital Gains Tax tax-free allowance threshold – £12,300 for the 2021-22 tax year – you’ll be taxed as follows:

• If you’re a basic rate Income Tax payer (ie with taxable earnings of £12,571-£50,270 a year) you’ll pay Capital Gains Tax of 10%, then  20% on gains that take you above £50,270 in taxable earnings.
• If you’re a higher or additional rate Income Tax payer (ie with taxable earnings of more than £50,270 a year) you’ll pay 20% CGT on your crypto gains over and above the CGT threshold.

To find out whether Capital Gains Tax is payable after selling cryptocurrency, you need to calculate your gain for each transaction.

Some allowable expenses are deductable for Capital Gains Tax, including (according to HMRC):

• “transaction fees paid before the transaction is added to a blockchain”
• “advertising for a buyer or seller”
• “drawing up a contract for the transaction”
• “making a valuation so you can work out your gain for that transaction”
• “a proportion of the pooled cost of your tokens when working out your gain”.

Need to know!

• Capital Gains Tax is obviously not due on crypto losses, but you can use these to reduce other crypto gains and any tax liability, providing you first report them to HMRC. Losses aren’t capped.

How to report and pay Capital Gains Tax on cryptocurrency

To report and pay Capital Gains Tax on cryptocurrency you can either complete a Self Assessment tax return following the end of the tax year or use the real-time Capital Gains Tax service to report and pay straight away.

You must keep separate records for each cryptocurrency transaction detailing:

• token type
• disposal date
• number of tokens disposed of
• tokens remaining
• value of the tokens in pound sterling
• bank statements and wallet addresses
• pooled costs before and after you disposed of them.

Need to know!

• HMRC can ask to inspect your cryptocurrency records if it decides to carry out a compliance

When is Income Tax rather than CGT payable on cryptocurrency?

Income Tax and National Insurance contributions (NICs) can be payable on cryptocurrency if your employer gives you them as a non-cash bonus or benefit (this could apply to those who mix employment with self-employment). If you need to pay Income Tax on income from crypto for this or other reasons, you’ll need to register for Self Assessment, if you’re not already registered.

If you occasionally dabble in crypto, you’ll probably only have to pay Capital Gains Tax on disposal. However, if you trade regularly, HMRC will consider you to be a crypto trader and you’ll need to report your income via Self Assessment and pay any Income Tax and National Insurance that’s due.

If you’ve paid Income Tax on crypto, Capital Gains Tax isn’t payable unless you later dispose of your tokens, when CGT will be due on the gain made since you reported for Income Tax.

Many cryptoassets are traded on exchanges that don’t use pounds sterling. If so, the value of any gain or loss must be converted into pounds sterling when you’re completing your Self-Assessment tax return. You’ll need to use supplementary page SA108 to detail crypto capital gains/income and losses claimed within your SA100 tax return.

Need to know!

• Fail to report cryptocurrency gains or income to HMRC and it can lead to penalties, while you’ll still have to pay tax you owe plus interest.

More information

Visit government website GOV.uk to download HMRC’s Cryptoassets Manual. It sets out the tax rules for both individuals and businesses that invest in cryptocurrency.

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The great resignation is the hot topic on everyone’s lips, with millions either leaving behind their old roles, or looking to in the near future. Much like the pandemic, it was unprecedented but bound to happen eventually.

This movement of people leaving their jobs en masse includes individuals from every demographic, too, reflecting a widespread frustration with traditional work and labour models.

At The Salary Calculator, we’ll walk you through:

• What the great resignation is
• What’s driving the great resignation
• The pros and cons of the great resignation
• How it will affect you and your work

What is the great resignation?

The great resignation, a term coined by business and management professor Dr Anthony Klotz in May 2021, refers to the current mass exodus from the workforce.

A study by recruitment firm Randstad UK recently conducted a survey of 6,000 workers and found that 24% of those polled were planning a job change within the next three to six months, 69% of which felt confident about their decision. Meanwhile, 16% felt anxious or concerned about finding a new role.

Employment Hero found that young people aged between 25 and 34 are those most looking towards a change, with a whopping 77% actively looking to leave their jobs within the next year. 74% of those aged 18-24 expressed similar sentiments. These were also the demographics that reported the most’ burn-out.’ Moreover, data published in i, showed one-third of millennials will seek out new employment if forced to return to the office full-time after the pandemic.

That said, those in more senior positions have also joined the great resignation. Executive outplacement firm Challenger, Gray & Christmas, found that in December, 106 CEOs said goodbye to their senior roles, and in the final quarter of 2021, this was up 16% on a year-over-year basis

It comes as no surprise then, that in the UK in July, job vacancies were at an all-time high, crossing the threshold of one million for the first time.

What’s driving the great resignation?

The great resignation has a number of different causes. One aspect is that following nationwide government-sanctioned lockdowns; remote working became the norm for many people. This life readjustment gave people time for reflection, and when compared with office work, many found they were able to spend less time commuting and more time with their family.

Remote working is also a good move for the wallet, with fewer expenses such as travel and eating out. Likewise, many are also quitting in search of better work opportunities and higher pay. There has also been a rise in the number of people deciding to be their own boss, and go self-employed.

It’s also important to note that certain industries are seeing more workers leave than others. Specifically, leisure and hospitality, retail and healthcare are the industries that have seen the biggest departures.

Should you join the great resignation?

Of course, when mulling over whether or not to leave your job, there are many factors to consider, and as with anything, there will be pros and cons.

Leaving your job and seeking out new employment or a different kind of employment can help you access greater flexibility, secure a more healthy work-life balance, and enjoy the benefits of a bigger salary. Likewise, those looking to leave their job may have come to the realisation that their work is no longer fulfilling or aligning with their values. As such, finding a company that shares similar guiding principles can mean much more job satisfaction.

That said, quitting one’s job is not necessarily an option for everyone. When thinking about quitting, it’s important to assess key questions such as:

• Am I in a financial situation to do so?
• Do I know what you want to do next?
• Do I require further training or education?
• Am I looking to join a new field?
• What are my family obligations?

How will the great resignation affect you?

The great resignation is very much a workers revolution, and many are arguing that employees are now in the driver’s seat. That said, it’s important to note that it’s still competitive out there, and in order to succeed, you need to be able to sell yourself, negotiate and network. Keeping your Linkedin fresh, making sure your resume is updated and conducting deep job searches will help you make the most of this opportunity.

However, not everyone is quite ready to jump ship just yet. For those who are comfortable in their position, you may have questions about how the great resignation will affect you at work. Well, a study recently conducted by the Society of Human Resource Management in the US found that out of those employees who decided to stay on when their co-workers left, 52% had taken on more responsibilities, and 30% found themselves struggling to get “necessary” work done. As a result, 55% are now questioning their salary, and whether it’s enough.

So, it’s fair to say that workers are feeling the knock-on effect of their co-workers joining the revolution. However, it’s not all doom and gloom for those who wish to stay in their current job, it’s important to be assertive if you’re struggling.

Speaking to The Guardian, Rahaf Harfoush, a digital anthropologist and the author of Hustle and Float, says in the aftermath of coworkers leaving, you should: “Look at your original role,” and assess how much you’ve taken on, then spell it out: “Here’s what I was hired to do; here’s how my time is allocated now. So either we need to reprioritise or we need to reallocate.”

Moreover, during this time, negotiating power is in the hands of employees, so it could be the right time to ask for a pay rise or a loyalty bonus.

News of rising energy prices will come as another financial knock to many people across the UK after what has been a turbulent two years. The cost of living is set to increase once again following a worldwide squeeze on gas and energy supplies.

In October, around 15 million homes saw their bills up 12%. Unfortunately, the situation is only likely to worsen, with industry leaders calling for government intervention to help tackle the “national crisis”.

At The Salary Calculator, we’ll walk you through:

• How much you can expect costs to rise by
• The causes of the price hike
• Whether there’s anything you can do to navigate this

How much will costs rise?

In the UK, the trade body Energy UK has released some bleak forecasts regarding energy bills, outlining that they could rise by 50% by springtime, which will ultimately hit low-income households and small businesses the hardest.

As a result, reports say that the energy bill for the average household could increase by £600 by April – and looking forward, next year, bills could reach £2,200-a-year on average.

Of course, with other rising living costs, this is concerning news for many. Alex Belsham-Harris, of Citizens Advice, says that already people are feeling the pinch. He added: “With major hikes to energy bills from April and other costs of living rising, the quickest and easiest way for the government to provide direct support for those hardest hit will be through the benefits system.”

What’s causing the hike?

Energy costs are on the rise for a number of reasons. Wholesale energy prices have surged as economies emerge from the pandemic, with demand increasing and fewer exports. Last year’s cold winter in Europe also played a part. So, there has been a range of technical and geopolitical issues at play. Since 2020, energy prices have risen by 250%, and in August, they rose further by a staggering 70%. This has led to more than 20 domestic suppliers going bust as the price cap prevented companies from charging consumers more to deal with this.

Although Ofgem’s price cap has limited energy suppliers in regards to how much they charge, this is to move in April and could reach £1,995-a-year per household.

What can you do?

It can be stressful thinking about the prospect of rising energy prices, and it’s understandable to have concerns and questions.

Some important information to remember is that if you’re struggling to keep up with payments, don’t put your head in the sand. Reach out to your supplier as soon as possible. Suppliers can help set up an affordable payment plan if you feel things are spiralling – they may even pass on the details of charities that can help you with your financial burden.

That said, if you feel as though the situation has advanced beyond that, it may be time to reach out to a debt adviser to help you navigate missed payments and the like.

Likewise, it’s worth noting that if your provider is one of the unlucky ones caught up in the crisis and goes bust, and you have credit on your account, it won’t be lost. Instead, your balance will be transferred to your new energy supplier – the same goes for any debt on your account; it will be passed on.

Of course, there are ways you can use energy more efficiently, too, to keep your bills lower. Simple things like not leaving appliances on standby and switching off lights when they’re not needed can have a big impact. Switching to low energy light bulbs can keep costs lower, too, as can using draft excluders and investing in better insulation and double glazing – although the latter may not be financially viable options for everyone.

2022 is finally here, and after what has been a difficult financial time for many, you may be looking for ways that you can improve your finances, especially following the splurge of the festive season.

Thousands of people make New Year’s resolutions each year, with finances often being a key focus. However, at the same time, many who make financial New Year’s resolutions find them hard to stick to. Often this is because the resolutions people make are inflexible, extreme and ill-thought-out.

At The Salary Calculator, we’ll walk you through some top tips that can send you on your way to a more secure and safe financial future and outline some resolutions that are easier to stick to. In this article, we’ll explore:

• Ways to build your credit
• How to build up an emergency fund
• How remortgaging can be helpful
• How to tackle debt
• How to become more financially literate
• How to set your sights on a new job

How to build your credit

When it comes to building credit, it may not be something you thought about until you decide you want to finance a car or perhaps buy a house. The credit system essentially gives lenders information about you and your finances, and if your credit score isn’t great, this could affect your ability to, for example, buy your dream house, or may mean you’re faced with pretty rubbish interest rates.

You can start building your credit in simple ways, such as getting a credit card. After making this decision, ensuring you pay it off in full each month will help to boost your credit score. Likewise, it’s also important to use only a small percentage of your credit limit, say up to 25%, to keep your score high. The same goes for if you have an overdraft; staying far below the limit and paying it off shows your responsibility when it comes to finances.

Keeping an eye on your household bills and setting up a direct debit is also a good way to make sure your credit score doesn’t dip into the red.

Building up an emergency fund

The last two years have certainly taken a toll on many people’s finances, and in the New Year, many may be looking to prepare and safeguard against future turmoil. Each month, if you can afford it, it can be a good idea to put away a percentage of your income for a rainy day.

According to WalletHub, working towards building up an emergency fund “should be one of the first orders of business for any financial makeover.”

The best way to start is by setting out clear goals and working out what you can realistically save. This amount will vary depending on your financial situation and type of occupation.

That said, once you’ve settled on a figure you feel comfortable with, it’s important to put this money aside in an account that enables instant access, so when you need your emergency fund the most, you’re not faced with lots of red tape and barriers. When choosing your account, it’s best to take a look at what’s out there on the market, and compare and contrast. There are a number of comparison websites that can help you out here, including Compare the Market, Money Supermarket, and GoCompare.

Remortgaging in the New Year

Remortgaging in the New Year can be a great way to save money. If, for example, your deal is coming to its end, your home’s value has increased, or you want a better rate, this could be a good move for you.

According to Norton Finance, the average household can save £400 each year through remortgaging. That said, it’s important to take into consideration whether remortgaging is the right decision for you. If, for example, your financial situation has recently changed, or perhaps you’ve experienced credit issues, or if you’re already on a good rate, this may not be the move for you.

Tackling your debt

Confronting one’s debt can feel daunting, and often it can feel easier to bury your head in the sand. However, the New Year is a great opportunity to set out a plan to face your debt head-on.

Starting to pay off your credit card debt is a great step towards better financial health, and of course, becoming debt-free can be incredibly liberating. This can be done in small chunks to make it manageable.

Elsewhere, when paying off your debt, make sure to prioritise what needs to be paid off first. Consolidating your debt can be helpful here, too, if you have different loans and credit card balances. If you’re unsure about how to go about this, speaking to financial experts can be a great way of accessing guidance.

Become more financially literate

Becoming more financially literate can make a world of difference to your life. Research shows that, in fact, few people are financially literate (just one in three in the UK).

Better financial literacy can help you to set better financial goals, invest your money more wisely, and save more efficiently. Whether it’s checking out the latest finance podcast, hitting the books or using financial management tools, accessing this kind of knowledge can place more control in your hands, help you avoid debt, and keep an eye out for risky investments and fraud.

There are some great podcasts out there that can help you on your way to becoming more financially savvy, including BiggerPockets Money, Future Rich, and Money 101, which provide down-to-earth, accessible guidance and top tips, making finances less intimidating.

Meanwhile, if you’re looking to get your nose stuck into some books, Money: A Users Guide – Laura Whateley, Real Life Money: An Honest Guide to Taking Control of Your Finances by Clare Seal, and Manage Your Money Like a F*cking Grown-Up’ y Sam Beckbessinger, may help to give you a fresh perspective on finances.

Seeking out a better paying job

The New Year is the perfect opportunity to seek out a fresh start job-wise. You may be aware that you’ve got as far as you can in your current role, and perhaps you’re not receiving the kind of wage packet that your skills entitle to you. Say goodbye to rubbish pay in the New Year, and take on the adventure of a new job. Reports even show that January is the best time of year to lookout for a new job!

That said, when looking for a new job, it’s also important to take into consideration a few different factors. Look inwards, and ask yourself why you’re seeking a new role, what kind of skills you have to bring to a new role, and what jobs do you expect to be eligible for. It’s always great to be ambitious and strive for something new and exciting, but be sure that you’re realistic in your approach, too.

Take a look at your CV and resume, ensure they’re up-to-date and in tip-top condition. This will allow you to put your best foot forward. Branch out on Linkedin, too. Connections are never a bad thing, and networking can even help you access a contact that could lead to you landing your dream job. Of course, practice interview tips as well, especially if it’s been a while since you last did an interview! This way you’ll be able to speak confidently about your abilities, experience and accomplishments and win over your interviewer.

The Self Assessment deadline is just around the corner, and by 31st January self-employed individuals must file and submit their Self Assessment tax return and pay any tax owed to HMRC.

While there’s still time to submit, it’s always best to complete your tax return as soon as possible, so you don’t risk making any silly mistakes and avoid getting hit with late penalties. Also, this year, there are some changes to Self Assessment to look out for.

At The Salary Calculator, we’ll walk you through:

• How to report Capital Gains Tax
• How to report Covid support measures
• How to access Self-serve Time to Pay
• What to watch out for

Capital Gains Tax reporting

Capital Gains Tax applies to those who have sold or ‘disposed of’ an asset, for example, a house that’s increased in value. From 6 April 2020 to 26 October 2021, this had to be reported and paid for within 30 days of completion. However, there is an update here, and for property disposals made on or after 27 October 2021, the “report and pay” deadline has been extended to 60 days.

If you’re registered for Self Assessment, it’s important to remember that you must report this on your tax return in the capital gains pages. That said, there are exemptions. If your only disposal is of your home and private residence relief applies, you don’t have to report this on the capital gains pages.

Reporting any Covid support measures

HMRC recently issued a warning to self-employed individuals that they must declare any COVID-19 grants they received on their tax return for the year 2020-2021. According to HMRC, over 2.7 million people claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2021, and if you did indeed receive SEISS, this must be recorded.

Likewise, other Covid support measures that must be included in one’s Self Assessment are:

• The Coronavirus Job Retention Scheme (otherwise known as the furlough scheme)
• Self-isolation payments
• Local authority grants
• Eat Out to Help Out scheme

That said, it’s also important to note that if you received a £500 one-off payment as a working household receiving Tax Credits, this does not need to be reported in your Self Assessment.

Self-serve Time to Pay

For many, the last couple of years has been a struggle financially. In 2020, according to a study by LSE, over a third (34%) of self-employed workers struggled to pay for basic expenses such as rent and mortgage payments. So, if you’re feeling the pinch this year, you’re not alone. That said, for those feeling anxious and overwhelmed at their tax bill this year, there is help out there if you’re worried you can’t pay your tax bill in full. You can now spread your tax bill over a period of time online via HMRC’s self serve Time to Pay system.

The Time to Pay system is available to eligible to Self Assessment taxpayers who:

• Don’t have other outstanding tax returns or any other tax debts
• Have debts between £32 and £30,000
• The plan made must be set up no later than 60 days after the tax payment’s due date (30 March 2021)

When setting up your payment plan online, you’ll need to be equipped with:

• Your unique Tax Reference number
• Your VAT registration number, if applicable
• Your Bank account details
• Details relating to any previous payments you’ve missed

When arranging your payment plan, HMRC will ask you some questions about your financial circumstances to gauge what will be affordable for you. Questions may include how much you’re earning, what an affordable payment scheme would look like for you, what your outgoings are, whether you have any savings or investments.

What to watch out for

HMRC has issued a warning around ​​copycat websites and phishing scams ahead of the Self Assessment deadline. As the deadline approaches, scammers are more likely to target taxpayers who are in a rush to submit their tax returns and have their guard down. According to HMRC, 800,000 tax-related scams have been reported in the last 12 months alone.

Myrtle Lloyd, HMRC’s Director General for Customer Services, has subsequently published advice on what to look out for if you think you might be being approached by a potential fraudster. Lloyd says to be wary of anyone who contacts you claiming to be from HMRC and rushes you. Likewise, anyone “threatening arrest” will not be calling from HMRC. Lloyd outlined: “If you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.”