Do you feel it's time to expand your accountancy firm's client base? The fact that 20% of Brits have bought cryptocurrency at least once means that upwards of seven million people in the UK could be in need of a crypto-savvy tax accountant. With demand for crypto taxes at all-time highs, could you be a go-to accountant for some of the millions of new British crypto investors?
Getting a head start on your competitors in picking up a chunk of new clients from the UK’s growing crypto market will be much easier, thanks to this guide. To get started, we’re going to give you an in-depth look at the UK crypto market and then offer you six valuable tips for getting started in crypto accounting.
How big is the UK crypto market?
The number of people who own cryptocurrency in the United Kingdom has increased by approximately 650% since 2018 - growing from high single digits to low double digits, with estimates between 6.2% to 14%, according to reports from Triple A and the HMRC, respectively. This surge in crypto ownership and adoption has pushed the number of UK citizens holding crypto to around 7 million.
Who owns crypto in the UK?
Knowing your target market is key to attracting clients, which is why it's worth taking a look at the demographics behind the statistics.
Interestingly, cryptocurrency investors in the UK are much more mature than in other international markets, with the bulk (42%) of crypto investors in the 35-54 age bracket, followed by 18-34, which make up around 38% of the total.
69% of crypto investors are male, with 31% female; however, the percentage of women getting into crypto worldwide has been on the rise. If this trend translates into the UK, then we could see the market receive a healthy boost in size.
The recent HMRC Commissioned Research also found 53% of current owners had holdings of up to £1,000, with 7% holding more than £5,000 in value.
Interest in buying crypto appears to correlate negatively with older age groups - although it’s worth noting that recent surveys show approximately 20% of crypto investors are over 55+, while over 25% of those aged 45-54 and 55+ are either already invested in, or interested in adding cryptocurrency to their investment portfolio.
In summary, you can get more accounting clients in the UK by focusing your marketing on a younger male crypto audience. With a demographic that will be increasingly growing in terms of disposable income over the coming years, addressing the needs of these clients by meeting their requirements within the realm of crypto taxes could be extremely lucrative into the future.
It's important to remember that demographics are constantly changing and even though there may be fewer older crypto holders, their portfolios could be considerably larger in value - as is the case in the Australian market.
Where is crypto headed in the UK?
Committing time and resources to expanding your accounting firm’s operation into the crypto space is a long-term decision, and as a result, you probably want to know if crypto has a long-term future in the UK.
Although crypto ownership is just shy of 10% in the UK (slightly below the global average), the pace of its recent acceleration suggests this won’t be the case for long.
As the crypto market matures, we can expect volatility to subside. Lower volatility will likely attract more investors, especially from members of the older age brackets who are often less open to taking risks but have deeper pockets. It’s worth noting that Finders found that many people who have yet to purchase crypto state are waiting for the market to become less volatile.
As the crypto market matures, we can expect volatility to subside. Lower volatility will likely attract more investors, especially from members of the older age brackets who are often less open to taking risks but have deeper pockets.
According to a recent survey by Finder, the two main reasons people have avoided investing in crypto are that they find it too complicated and that it simply doesn't interest them. However, these problem areas are increasingly being resolved as more people gain access to crypto education online - increasing their financial and crypto literacy, and the increasing presence of blockchain and web3 in our everyday lives sparks people's interest.
The UK crypto market is moving in the right direction, with a crypto-friendly Prime Minister, and new HMRC guidance that is making crypto compliance easier than ever. With millions of potential clients in need of crypto tax advice, this is a great time to get your firm’s name out there.
In the following section, we’ll share six ways you get more accounting clients in the UK and maximise your firm's potential in the world of UK cryptocurrency tax.
Understand UK Crypto Laws
Until recently, cryptocurrencies were almost unheard of, and governments have only just started passing clear regulations regarding how they should be taxed.
Luckily, the crypto tax landscape in the UK is not nearly as complicated as you might expect, so getting your head around British crypto tax rules won’t take you too long at all, and the reward for doing so could be highly lucrative.
HM Revenue & Customs (HMRC) has published an in-depth guide on its website that outlines how it taxes crypto-assets. Here’s what you need to know in a nutshell:
Capital Gains Tax
The HMRC states that trading crypto tokens could result in the application of Capital Gains Tax under the following circumstances:
- Selling tokens
- Swapping tokens
- Paying for goods and services with tokens
- Gifting crypto (unless it's to a spouse or civil partner)
The amount of capital gains tax paid is determined by the difference between how much someone paid for the crypto asset and how much they profited from its sale.
HMRC does account for some allowable costs that make it possible for investors to deduct certain costs from their capital gains; these include the cost of:
- Advertising for a buyer or a seller
- Drawing up contracts between parties
HMRC also provides useful guidelines on what records your clients should keep to ensure they stay within the rules.
Income Tax and National Insurance (NI)
HMRC could come knocking for Income Tax and NI contributions if someone receives crypto assets as a form of payment or through mining.
Tokens received through mining will be considered other taxable income, which means your crypto mining clients must submit a Self Assessment tax return unless their assets are worth less than GBP 1,000.
Getting Paid In Crypto
If your client’s employer pays them in crypto, then they’re expected to pay their Income Tax and NI through PAYE. The employee is still expected to keep the appropriate records of token transactions even if their employer takes care of tax compliance.
Learn by doing
Dabbling in the crypto market firsthand isn’t necessary for newcomers to the crypto tax industry, but it will help you get a feel for how this brave new world of decentralised finance works. We recommend you check out Binance, Bybit, Coinbase, or eToro if you’re looking for a crypto exchange where you can get started. We list a further roundup of British crypto exchanges that are noteworthy in terms of their safety records.
While trading tokens like Bitcoin (BTC) and Ether (ETH) has been the primary activity in the crypto space, the growth of Decentralised Finance (DeFi), yield farming, and staking have levelled up the blockchain economy. Therefore, it might be worth getting familiar with all areas of the crypto space and what areas are more likely to impact your crypto clients.
Get ahead of the competition
If you’ve read up on CRA’s guidelines and got to grips with crypto tax rules, then it’s time for you to start attracting your share of the growing number of crypto investors in Britain. Promote yourself on your website that details the service can provide to guarantee inventors don’t end up on the wrong side of the HMRC.
"Crypto accountant near me" is a popular search term - meaning investors are hunting on Google for someone to help. So be the accountant they pick by ensuring a page of your website is dedicated to your crypto accounting services.
You can even take your website content one step further by offering sections that answer popular queries, like:
- How is crypto taxed in the UK?
- How do you report crypto taxes to HMRC?
- How to calculate capital gains.
- How to calculate crypto income.
Remember to include the keywords 'Crypto Tax' in your Google Business listing.
Join industry bodies
If you're not already involved in the crypto community professionally, it pays to belong, especially when the talent pool is still in its infancy and rapidly expanding. For example, your accounting firm could join a stack of industry groups today, spreading the word that your practice is ready to do crypto taxes. Here are two of them to consider:
- CryptoUK: CryptoUK represents blockchain businesses and industry players; according to the group's website, it currently has over 130 members and runs over a dozen working groups. The organisation seeks to clarify the status of crypto regulation in the UK, making it a particularly useful source of information for anyone running a company such as an accountancy firm in the space.
- techUK: techUK aims to represent UK businesses by giving them a voice through industry forums and access to standards bodies. The organisation supports members in their journey into the blockchain space while providing updates on the development of the British government's crypto regulatory framework.
Get listed on Koinly
If you'd like to get more accounting clients in the UK - whether you're an experienced crypto accountant or a relative newcomer - you can also get listed on Koinly's accountant's directory. We have a dedicated UK crypto accountants directory to help UK crypto investors find reputable and trustworthy crypto accountants.
While the foundations of crypto tax are pretty straight-forward, due to the sheer amount of assets a client may hold and the volume of transactions they may have made in a single financial year, the real challenge for crypto accountants is the resources needed to process and calculate client's crypto tax liability.
This is why almost all crypto accountants opt to use the right tools for the job, such as a cryptocurrency tax calculator - like Koinly.
Koinly’s crypto tax software does all the calculations on behalf of you (and your client). It imports transactions from all the exchanges, wallets, or blockchain a given investor uses, identifies the cost basis of those transactions (or the fair market value on the day of the transaction), and converts it into GBP - saving hours of spreadsheets and manual calculations.
In even better news, Koinly generates a variety of crypto tax reports compliant with HMRC guidelines, ready to help your client file easily.
Koinly offers licences for crypto accountants managing every step on behalf of their clients, or your client can simply give you access to their existing Koinly account via their settings.
Find out more about Koinly's crypto tax solutions for accountants, here.