Follow up

HMRC’s reminder to cryptoasset holders

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Allowance cut: options for clients

Tax by stealth. The annual exempt amount (AEA) is currently £6,000 per individual. It is available to most UK resident taxpayers (other than longer-term remittance basis claimants). This is less than half of the AEA for the 2022/23 tax year, when it was £12,300. For disposals made on or after 6 April 2024, the AEA is being halved to £3,000. This means additional capital gains tax of up to £840 per year for individual clients, or £1,680 for couples.

Pro advice. A caveat is that, due to the recent falls in inflation, there are rumours about tax cuts sooner than expected, so it’s possible the cut will be delayed or cancelled in the Spring Budget, but our view is that this is unlikely, and any cuts will probably focus on income tax.

Planning. An obvious strategy to avoid wasting the higher allowance is for clients to realise gains before the cut, e.g. by selecting shares in a portfolio to just use the AEA.

Pro advice. This should be done as a matter of course for clients with listed shares in any case, and you should check whether an investment manager has already done this.

However, not all clients have listed shares as investments. But there may be alternative investments that could be used instead. HMRC is currently focusing on investors in cryptoassets (see Follow up ). While this focus is on the 2022/23 tax year and return, it is an area that is under increasing scrutiny. It is certainly worth checking this with clients. This can provide another opportunity to realise gains.

Pro advice. Exchanging one cryptoasset for another is considered a taxable event, so look in particular for transactions where no money (in the traditional sense) is received.

Accelerate. Another possibility is to try to accelerate gains that would otherwise fall into the 2024/25 year, i.e. gains that are already in the pipeline. This could be achieved by ensuring contracts are exchanged on or before 5 April 2024.