Handy Guide to UK Gambling and Crypto Taxation 2024

It is essential to familiarise yourself with the regulations and taxation guidance regarding gambling in the UK before participating in crypto gambling activities to avoid potential legal issues or penalties.

Crypto gambling is a form of online gambling in which players use cryptocurrencies like Bitcoin or Ethereum to bet on games or events. The demand for crypto gambling is growing, as players have access to a wide range of games with high bonuses and faster transaction periods than traditional online casinos.

Gambling winnings are not taxable in the UK; however, if you cash out any winnings as crypto assets instead of fiat currency, this may change things. Any gambling winnings in the form of crypto assets will need to be tracked for tax purposes, as future disposal events will be relevant for capital gains tax. 

This article examines cryptocurrency taxation in the UK and provides valuable tips regarding planning, record keeping, professional assistance and knowing your tax laws. We also take a look at UK crypto taxation - what you need to know regarding HMRC’s regulations.

Cryptocurrency Taxation in the UK

The crypto industry is developing rapidly, and the tax implications have become more complicated. If you don't have the time to read HMRC's complete guidance for those with crypto assets, we will answer some of the pertinent questions regarding UK cryptocurrency taxes.

Definition and Basics:

The value of crypto assets fluctuates, but the UK authority does not consider these assets to be a currency or that the buying and selling of these assets is gambling; therefore, in HMRC's view, profits or gains from buying crypto assets are taxable.

Capital Gains Tax is charged on the profit from selling an asset, and NFTs are no exception. The relevant Income Tax bracket applies if your income is in cryptocurrency.

Types of Crypto Income and Associated Taxes:

There are various types of cryptocurrency transactions, and we will take a look at the associated taxes:

1. Buying—In the UK, you won't be required to pay tax on certain crypto transactions, including buying crypto with fiat currency, HODLing, transferring crypto between your wallets, donating crypto to charities, or gifting crypto to your spouse.
2. Selling - If you sold your crypto for more than you bought it, you will pay Capital Gains Tax (CGT) on the profit. Losses in a selling transaction can offset your capital gains in the current year and reduce your tax bill.
3. Mining - Cryptocurrency received from mining is considered income. It is important to remember that your income from mining is classified differently, whether you are mining as a hobby or as a business. If you are mining as a hobby, this has to be declared separately on your tax return. If you're mining as a business, your mining income will be added to trading profits and be subject to income tax. Any income derived from disposals will also be considered income.
4. Staking - Cryptocurrency staking rewards are taxed as income upon receipt. When you dispose of your staking rewards, you’ll incur a gain or loss depending on how the price of your crypto has changed since you received it.

Tax Rules and Reporting:

To accurately convey your crypto-related activities to HMRC, you will need to complete two primary forms:

• The HMRC Self-Assessment Tax Return SA100, including income derived from crypto activities
• The HMRC Self-Assessment Capital Gains Summary SA108, detailing your crypto capital gains and/or losses

Important: The submission date for these forms is the 31st of January 2025, and the UK financial year runs from April 6th to the 5th of April the following year.

You'll incur a capital gain or loss every time you dispose of a crypto asset. When your total capital gains in the tax year exceed the annual capital gains allowance, you will pay capital gains tax.

Long-term capital gains are taxed at lower rates, meaning there may be a benefit to holding onto your crypto assets for longer before you sell them. Short-term capital gains are taxed at the same rate as your ordinary income, while long-term gains are taxed at 0%, 15% or 20%.

Tax Deductions and Exemptions:

Here are some pointers to keep in mind that will assist you in limiting your tax liability while complying with UK law:

• You can only deduct a capital loss from capital gains arising in the same year or a future year, and you must claim the loss by reporting it to HMRC.
• You cannot offset capital losses arising from the disposal of crypto assets against your income.
• If you are liable for capital gains every tax year, you will receive an annual tax-free allowance, known as the annual exempt amount (AEA).
• You only pay Capital Gains Tax if your overall gains for the tax year (after deducting any losses and applying any reliefs) exceed the annual exempt amount.

“Did you know the 2024/25 capital gains allowance is £3,000? Gains under the threshold are tax-free!”

HMRC is challenging those it suspects of failing to report their cryptoasset income and gains correctly, so we hope this guide regarding cryptocurrency taxation in the UK has been informative.

How Online Gambling is Taxed in the UK

Anyone who has won a significant sum while gambling with Bitcoin in the UK may have wondered how to appropriately report their winnings to HMRC or the relevant tax authority.

While that may be how things are done in the US, the UK has a very different approach to gambling and taxation, whether you have found the casino via a website with online casino reviews or simply enjoying the entertainment value of your regular online casino of choice.

Taxes on Gambling Winnings in the UK:

When you bet money at a land-based casino, bookmaker, casino website, or mobile gambling app, you do not have to report your winnings to the Inland Revenue, as there are zero taxes on gambling winnings, regardless of where you're playing or how much you've won.

The lack of taxation on betting and online gambling is a significant reason for people to come to the UK to play their favourite games. Rather than having to pay anywhere from 1% to 25% in taxes in places such as the USA, France, and Macau, they can take home all their winnings.

Taxes on Casinos and Gambling Sites:

Operators of casinos, bookmakers, or online gambling websites must pay taxes if they cater to United Kingdom players. The taxes are presently 15% of all gambling income for companies and ensure that the UK government collects a significant income from all forms of gambling without taxing the average person when they win.

UK Crypto Gambling Taxation:

With crypto gambling, you can place bets and potentially win money via hundreds of websites and protocols that allow users to place bets and receive rewards in cryptocurrencies like Bitcoin and Ethereum.

What Crypto Gambling Taxes Are Due?

Here are four important gambling tax facts to keep in mind:

1. If you sell crypto that you’ve won from gambling, you will incur a capital gain or loss depending on how the price of your crypto has changed since you received it.
2. In the UK, gambling is legal and is not taxable unless it is your primary source of income.
3. Your tax rate on gambling income can vary from 0-37%, depending on your tax bracket.
4. Some crypto gambling platforms require users to convert their crypto to USD. Any time crypto is exchanged for fiat or for another digital asset, it becomes taxable and subject to CGT.

“When trying to calculate your capital gains, keep HMRC share matching rules in mind.”

What Reports Do You Need to Provide?

Trying to track your cryptocurrency taxes manually can take time and effort. There is an easier way: using crypto tax software to help you keep track of your cryptocurrency income and capital gains. Connect your wallets and exchanges, and let the platform take care of the rest.

Crypto gambling is an attractive option for users looking for a more convenient, private, faster and accessible way to gamble online.

Track your crypto gambling transactions with Recap and benefit from their crypto tax calculator, the essential tool to help you accurately calculate and report your crypto gambling transactions for tax purposes.

Get Your Crypto And Gambling Taxes In On Time

Calculating your crypto taxes can be daunting, especially for those filming for the first time, so here are some valuable tips:

1. Take charge of record keeping for all your crypto transactions to ensure you don’t end up under or over-paying
2. Calculator tools like Recap are handy when you have many transactions to keep track of
3. Getting specialist crypto tax advice from an accountant is invaluable, such as help with strategies to lower your tax bill.
4. Stay updated with the latest crypto tax guidance using resources like Recap's UK crypto tax guide.

Tax Prep Advice from Recap.io: When filing your crypto taxes, you'll need to document calculations and accurate valuations for your assets, so good record-keeping of all historical transactions is imperative. You can stay on top of this with a spreadsheet, but this becomes difficult if you've been participating in complex activities. Crypto tax calculators like Recap make tracking your crypto portfolio a breeze. You simply connect your accounts and wallets, and with all your transactions in one place, we take care of fair market valuations and tax calculations for you, generating a crypto tax report containing all the information required by the HMRC.

The Best Crypto Casino For You

Now that you are comfortable maximising your crypto tax returns, we recommend visiting our crypto casino section for the latest Bitcoin casinos, exciting welcome bonuses, and game releases.