Autumn 2024 Budget Changes for Crypto Investors

Immediate CGT increases for crypto investors 

Changes to the rates of capital gains tax were expected and most crypto investors will heave a sigh of relief to see the increase is not as high as some predicted. The new rates for individuals making disposals of cryptoassets apply to disposals on or after 30 October 2024; so there is no opportunity to sell quickly and bank the old rates.

The current tax year will need to be split into two periods for 2024/25 and you will need to work out the total gains in each period and apply the CGT rates below:

Recap.io, our crypto tax calculator partner, has already implemented these changes in their software to split the gains, so you will be able to get the figures you need to optimise your tax position before the end of the tax year, to account for these tax changes. 

Under existing provisions capital losses, the CGT Annual Exempt Amount of £3,000 and any unused income tax basic rate band can be used in the most beneficial way in either of the two periods. Careful consideration of these allocations will be key to reducing the gains in the later period to minimise the overall CGT bill.

The CGT rate you will pay on your taxable crypto gains depends on your total income for the tax year (this would usually include your employment income, self-employment profits and investment income).

Where the taxable income is more than £50,270, the CGT rate is now 24% (but was 20% for disposals up to 29 October 2024). Where the taxable income for the year is less than £50,270, the deficit below £50,270 becomes the amount of capital gains that can be taxed at the lower 18% capital gains tax rate (which was 10% for disposals up to 29 October 2024). Where there is no income in the year, a maximum of £37,700 capital gains can be taxed at the 18% CGT rate (formerly the 10% rate).

Should I now consider selling crypto to my Limited Company?

The increased CGT higher rate of 24% for individuals is certainly making holding crypto in a Limited Company more attractive than it was, with only a 1% difference in the tax rate. Crypto income and gains arising in an investment company continue to be subject to 25% corporation tax, as there were no changes to this in the budget. If you plan to extract all the profits the company generates this can often be inefficient overall for tax, as personal tax is paid on all the income taken out of the company (via salary and dividends). 

It can be a great medium to long term investment vehicle for crypto though, if you don’t need to take out profits regularly and instead want the company to reinvest them.

In particular, if your personal income yield from crypto is high and your other taxable income is significant, it may be worthwhile considering the pros and cons of transferring this income generating crypto into a company in more detail. 

If you move your personal crypto into a company, you are personally treated as disposing of the crypto for CGT purposes at market value (regardless of whether the company pays you full market value for the crypto or you gift it free of charge). 

If you have some crypto standing at a tax loss, then this can be transferred into the company free of personal CGT. The capital loss cannot be offset against your other gains, but it can be used against gains arising on other crypto transferred to the company at a gain. It is highly recommended to seek professional advice as this can be complex to ensure you navigate the matching rules to achieve the intended result.

By selling the crypto to your company, you build up a credit balance ‘owed to you’ that can be taken from the company at any time free of personal tax.
HMRC tackling non-compliance 

The Chancellor was clear that HMRC will prioritise tackling non-compliance and reducing the tax gap created by those who are not declaring and paying their taxes. Buried deep in the budget tax documentation is a 12 week consultation on this topic where HMRC are seeking to extend their reach and powers in tackling this. 

The outcome of the Cryptoasset Reporting Framework (CARF) has been published and confirms the government is committed to implementing this to ensure that worldwide crypto activity by UK investors is reported automatically to HMRC. The first reports will be made to HMRC by 31 May 2027, but will cover crypto activity in the calendar year from 1 January 2026. 

We have already seen increased activity from HMRC tackling crypto non-compliance in recent months with the launch of a crypto disclosure service to bring your tax up to date and HMRC issuing targeted ‘nudge letters’ to individuals they think have not declared their crypto activity.  

Other budget changes 

See our in-depth summary of all the changes introduced in the Autumn 2024 Budget.

Get in touch with our crypto team  if you want to discuss how the budget changes affect you and any tax planning you want to consider in light of them. We can also assist you making a voluntary disclosure to HMRC to bring your crypto taxes up to date.