How to Calculate Capital Gains Tax | Taxable Income Rates

How to Calculate Capital Gains Tax: What is the capital gains tax rate in the UK in 2022? In the UK, all capital gains are taxed at the same rate since short-term and long-term rates do not exist. Is the tax rate based on taxable income? The tax amount owed is solely based on your earning income.

Kindly find below a table showing the UK tax rates and taxable income:

Tax Rate Taxable Income

10% Basic Rate Income Band (up to £50,270)
20% Higher Rate Income Band (up to £150,000)
20% Additional Rate Income Band (more than £150,000)

Simply put, there are two rates of 10% and 20%; if your earned income is less than £50,270 in 2021, you will be liable to pay 10% on your crypto gains, and similarly, if you earned income is more than £50,270 in 2021, then you will be liable to pay 20% on your crypto gains.

HOW TO CALCULATE YOUR CAPITAL GAINS TAX

At Crypto Accountants, we pride ourselves on being able to ensure you have all the tools and information needed to calculate the tax you owe to the HMRC.

However, we shall give you a little insight into how these taxes are calculated:

• Calculate your cost basis which is the combined amount of how much you paid to buy your cryptocurrency and the fees for the transaction.

• If the crypto in question was acquired by other means including airdrops or forks, then you calculate the fair market value of the crypto on that day you received it in GBP. This will serve as your cost basis.

• The cost basis will allow you to calculate your capital gain or loss which is the difference in value from when you acquired the asset to when you sold, exchanged, spent, or gifted the asset.

• If you end up in a profit, you will be liable to pay Capital Gains Tax on the gain.

• If you end up at a loss, you will not be liable to pay this tax.

• It is crucial to keep a record of all these transactions for the HMRC.

To ensure it is done correctly, Crypto Accountants are at your disposal for this very task.

To book an appointment, visit our website at https://www.cryptoaccountants.live/.