Do I need to pay tax on cryptocurrency holdings?

Do I need to pay tax on cryptocurrency holdings?

I put £5,000 into bitcoin in September 2019 and more recently I purchased a dogecoin. I understand that I may need to pay both income tax and capital gains tax. Is this true? If so, what steps do I need to take to ascertain my tax liability?

Matthew Watkins, tax director at accountancy and business advisory firm BDO, says it is a myth that the disposal of cryptoassets falls outside the scope of UK taxation on the basis that the profit or gains arising from it are akin to gambling or lottery type winnings. This is not correct. 

HM Revenue & Customs published guidance in December 2019 explaining its view on how these transactions ought to be taxed. For individuals, anyone selling cryptoassets will be subject to capital gains tax (CGT) on their profits, and this will need to be reported on their self-assessment tax return.

If you do not file tax returns then you must register with HMRC. The deadline for doing so is six months from the end of the relevant tax year, so before October 6 2021 for the current tax year.

There will be some circumstances where HMRC may take the view that the individual's activities in buying and selling