Cryptocurrency and How To Account For It

Most of us have heard of cryptocurrency but understanding and approaching it using the right resources can be difficult. Cryptocurrency is a digital virtual currency which is processed through cryptography, enabling it practically impossible to imitate, counterfeit or double-spend. Cryptocurrency use blockchain technology which is a data structure that allows the creation of a digital ledger of data and to share it across a network of independent parties. This means it is decentralized and exists free from government control or sovereignty, unlike standard fiat money.

Through cryptocurrency, individuals and businesses can process secure payments online which are denominated in terms of virtual tokens, represented by ledger entries internally inputted to the system. This self-regulation, decentralized and democratic system has seen cryptocurrency evolve rapidly since the very first token, Bitcoin, was released into the ether. This happened in 2009 when a mysterious person named Satoshi Nakamoto created Bitcoin, its reference implementation and authored a white paper on the token. Nakamoto’s identity has never been revealed, with much speculation it’s a combination of people who use a pseudonym to detract attention.

Since then, cryptocurrency has grown into a monumental industry, with the market approximately worth over $2 trillion. There are now over 6000 different cryptocurrencies in circulation including Ethereum, Cardano, Tether, XRP, Dogecoin, Stellar and a whole lot more. Despite cryptocurrency’s rapid growth, there is still much concern about the nature of cryptocurrency specifically when it comes to the accounting and tax processes around it. We break down how to properly account for your crypto, how we at Nordens can help and why cryptocurrency is here to stay.

 

What Are The Tax Laws Behind Cryptocurrency In The UK?

If you’re buying cryptocurrency and selling at a profit, the tax laws surrounding it can be complex. It all depends whether you’re classed as a business or an individual and whether HMRC determine your crypto is an investment or you qualify as a crypto trader. This is measured on such things as the amount and frequency of crypto transactions, the time devoted to crypto activity, the length of time you hold instruments (whether they’re bought and sold within minutes or kept for longer), risk, commerciality etc.

If it’s determined you are in fact a business then any income made will be added to trading profits and therefore become subject to income tax. Fees or rewards for any staking activity will also get added, whilst reasonable expenses will be deducted. Any gain in value from the time of acquisition will also get added to trading profits, as well as standard National Insurance contributions.

If it’s determined you are in a fact an individual and treat cryptocurrency as an investment, then you will be subject to capital gains tax (CGT) when selling, exchanging, giving away or using crypto to pay for goods or services. If you fall within the higher or additional rate tax band (your income exceeds £50,271) then your capital gains tax rate will be 20%.

If your income falls in the basic rate (£12,571 – £50.270), the rate in which tax is calculated depends on your taxable income as well as the size of the gain (after any allowances get deducted). HMRC calculates this using a share pooling method, meaning the average of all acquisition costs sets out purchase cost of the crypto being sold.

 

Will Cryptocurrency Keep On Growing?

The short answer to this, is most likely. As standard fiat money and global banking infrastructure continues to be subject to issues, more and more people are choosing to enter the cryptocurrency realm due to its control, self-sovereignty and transparency. As well as this, the use of cashless and mobile payments are forever increasing, which of course strengthens the argument that cryptocurrency is the future.

Due to value of certain crypto coins hard to distinguish in fiat money terms, its volatility concerns people. However, the value of cryptocurrency continues to rise with many experts predicting we are only still in its infant stage. As more companies and organisations use blockchain technology to grow their offering and integrate into platforms, the technological knowledge of cryptocurrency will grow leading to more interest and investment naturally.

 

How Can Nordens Help With Your Cryptocurrency?

The number of accountancy firms dealing with cryptocurrency is extremely limited, due to the somewhat volatile nature of crypto and the fact that the tax laws can be confusing. Fortunately, here at Nordens we can help you with any of your cryptocurrency concerns or needs. Our team of crypto experts will help navigate the complexities in disclosing your cryptocurrency assets and gains, enabling you to be compliant and up to date with HMRC and its tax treatments on crypto.

As well as this, we’ll be on hand to research any new developments involving cryptocurrency to make sure we’re efficiently informed to offer you the highest quality of service and insight possible. Our cryptocurrency services include:

  • Crypto Tax Compliance & Reporting
  • Crypto Tax Planning
  • Crypto Consultancy
  • Crypto Wealth Management
  • Crypto Bookkeeping

 

We hope this has outlined to you the basics around cryptocurrency and why hiring an accountant for your crypto is of huge benefit. If you require any further information on our cryptocurrency services, or anything accounting related for that matter, please don’t hesitate to get in touch with our Client Success Manager, Sam Moss, at sam.m@nordens.co.uk. Alternatively, you can get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.

 
Beyond Accountancy

At Nordens, we're more than just accountants - we're business experts who can help you achieve your biggest goals.

Nordens Strategic

Our specialist strategic division at Nordens boasts some of the leading entrepreneurial business minds in the country. We cater towards delivering consistent success stories, whilst helping businesses achieve above and beyond their initial goals.

Through highly-tailored guidance, coaching and advice, Nordens Strategic are able to define exactly how your business can reach new levels of success.

Regardless of how you define ‘success’ for your business, our strategic service is guaranteed to bring about real and lasting change. By partnering with some of the UK’s top business coaches, we’ll steer you along the path to a greater future.

Accounting 2 You

Every business, no matter how big or small, needs to make the right decisions, and how to best manage your accounts can put huge question marks over your business. Accounting2You is here to take that pressure off and provide you with all the answers you need.

Our bookkeeping branch offers a fully inclusive, comprehensive service that you can trust. Since 2005, our specialist bookkeepers have been successfully managing the accounting of both individuals and small businesses.

With experts in payroll analysis, credit control and financial recording, Accounting2You will lead your business efficiently, and with real purpose, towards a prosperous future.

Voted as EXCELLENT - 9.9 out of 10 based on 167 reviews

<
Chris Dyer

Director - Metro Bank

Nordens are always very easy to deal with and extremely professional and efficient. I would have no hesitation in recommending them to my clients for their accountancy needs, no matter how complex they may be.

Read more reviews on Trust Pilot

Jamie Brown

Co-Founder - Chicmi Limited

Very good to work with - the team go above and beyond to make the accounts easy and efficient. They're all super friendly and a joy to work with.

Read more reviews on Trust Pilot

Simon Rose

Director - Rose Opticians

I have been using Nordens Chartered Accountants for 5 years and very happy with the service provided. All members of the team are very knowledgeable and have a wealth of experience which has proved very beneficial to my organisation

Read more reviews on Trust Pilot

Rebecca Bossick

Founder & Director - Physio LDN

Very easy to contact and put me in touch with the right person whenever I need to ask any questions. Extremely knowledgeable and can help me manage my various businesses whenever I need.

Read more reviews on Trust Pilot

James Aconley

Principal - Pauline Quirke Academy

Great accountants, always available to offer advice. The team have transformed my business.

Read more reviews on Trust Pilot

Christopher Wilce

Founder - Dataphone

Having worked with Nordens over the last 5 years, not only to look after my annual accounts but they have also provided outstanding professional advice. They have guided me through a Company share buyback with clear and objective advice. We have also been using Nordens strategic services for a couple of years, which has helped bring about significant improvements that exceeded my expectations. With experience of working with several local accountants over my 29 years in business, I’m very pleased with the service I have received from Nordens.

Read more reviews on Trust Pilot

Dave Hodges

Director - Linekers

Trusted our business with Nordens for over 10 years now and watched the company grow into the successful innovative business it has become today. Deservedly so. Every aspect of financial advice we need is always given promptly and with a smile. We have total confidence in all aspects of advice Nordens give. If you are looking for accountants, its a no brainer!

Read more reviews on Trust Pilot

Tony Charles

Founder - Foundation Sports Limited

A fantastic, modern, vibrant firm that care about the clients and their staff in abundance. It is rare to find an Accountancy firm with such vibrance and focus and relationships. It is no wonder they win award after award in their field.

Read more reviews on Trust Pilot

Peter Horlock

Managing Director - Prime Time Boilers

I have been with Nordens for many years now and they are a great accountants.

Read more reviews on Trust Pilot

Simon Cushing

Founder - Vivid Finishes

We have used Nordens for the last 5 years and have had a great service throughout. The guys are very passionate about what they do and have played a part in the growth of our company, highly recommended.

Read more reviews on Trust Pilot

Andrew Martin

Managing Director - AMD Interior Architecture

Great Service at Nordens from a friendly very approachable team Particularly Kirsty Willis and Joe Sword who have been helping us since we started the business in 2016.

Read more reviews on Trust Pilot

James Robinson

Director - Forma London

Nordens provide a first class service. We moved to Nordens last year and have been impressed with the level of service provided. Keep up the good work!

Read more reviews on Trust Pilot

>
Latest News

We've always got our ears to the ground when it comes to interesting, useful and topical information relating to business and accountancy.

Making Tax Digital (MTD)…
The Making Tax Digital scheme recently got handed another delay to 2024. This of course allows more time for business owners and self-employed to get their affairs in order, however by joining the scheme now before the deadline...
5 Areas Of The…
The construction industry is one of the most well-established and growing sectors on earth, with employment rising 2.6% per year on average between 2015 and 2020. With the pandemic forcing the public indoors, millions of people...
Nordens TV

We love making videos that break down convoluted accountancy jargon into plain-talking, actionable and accessible facts.

Live Webinar – Autumn…
The Chancellor of the Exchequer, Rishi Sunak, carried out his briefcase and laid out his Autumn Budget plans on Wednesday 27th October 2021. The Autumn Budget doesn’t usually attract massive attention, however, due to the econo...
Live Webinar – Time…
Watch our latest LIVE webinar titled ‘Time To Revive' that was held on Wednesday 3rd February 2021 at 4pm GMT hosted by our CEO Mitch Hahn. Last year was tough for all of us. Now is the time to see what 2021 brings and how we c...
  Why I Founded Nordens
Accounting 2 You

In November 2002, having sold our other business interests off earlier in the year, I decided to set up Nordens Chartered Accountants. The easy part was knowing how to do it, as I had established and built a smaller practice a few years earlier. The difficult part, for me, was not following the traditional accountancy path. Having run businesses, both successfully and unsuccessfully, I wanted to help business owners resolve their short term problems and work with them to achieve their longer term goals. Business has always been my interest and I love that I can help business owners achieve what seems like the impossible every single working day.

Mark Norden Signature

Mark Norden
Founder

We're Professionally Certified

Our limited company accountants have a range of qualifications from The Institute Of Chartered Accountants (ICAEW) to the Association of Chartered Certified Accountants (ACCA). We worry about the bye-laws, regulations and ethical guidelines of the ACCA so you don’t have to! That makes us an ACCA-accredited employer as well as a Professional Passport-accredited one!