Crypto tax: record keeping requirements

As cryptoasset exchanges may only keep records of transactions for a short period or may not be in existence when an individual completes a tax return, HMRC places the onus squarely on the individual to keep records of all their crypto transactions.

Such records include paper (cold) wallets containing the individual’s private and public keys; electronic (hot) wallets on devices; downloads of all wallet activity from cryptoasset exchanges and hardware (cold) wallets like USBs containing the individuals private and public keys. All transactions in a wallet should show balances and transactions, either in full or via reference to a public blockchain.

Records such as points of deposit into a bank account and use of a crypto ATM should also be kept and are part of the records from acquisition to disposal and should be produced for an HMRC enquiry into gains made on disposal.

Specifically the records must include:

  • the type of cryptoasset
  • date of the transaction
  • if they were bought or sold
  • number of units involved
  • value of the transaction in pound sterling (as at the date of the transaction)
  • cumulative total of the investment units held
  • bank statements and wallet addresses, in case these are needed for an enquiry or review.

The onus is on the individual to keep these records in order to defend their tax position.