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2023-03-31

How Investing vs Trading impacts tax

In most cases of buying and selling cryptocurrency as a retail investor, you are participating in investing rather than trading. The two are treated differently for tax purposes.

  • Investing is subject to capital gains tax or income tax, depending on the nature of the transaction.
  • Trading in this case refers to self-employment which is subject to income tax and National Insurance Contributions.

The key difference between investing and trading – along with the different tax treatments, is how losses generated in the crypto-activity can be used.

In their guidance, HMRC have explicitly stated that they would expect it to be exceedingly rare that any crypto-activity constituting buying & selling crypto would be classified as “trading”.

If you are uncertain, speak to a tax advisor as there are always exceptions, including but not limited to, developing tokens and large scale mining.

How is crypto tax calculated in the United States?

You can be liable for both capital gains and income tax depending on the type of cryptocurrency transaction, and your individual circumstances. For example, you might need to pay capital gains on profits from buying and selling cryptocurrency, or pay income tax on interest earned when holding crypto.

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Product update - 18th May 2022

At Summ (formerly Crypto Tax Calculator), we are constantly working on improving our product so you can have the best experience at tax time. Check out our blog for the latest product updates.

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This tax guide is regularly updated: Last Update  
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It’s that time again, we’ve got a whole bunch of exciting updates to the Summ (formerly Crypto Tax Calculator) platform to announce!

First up, users now have the ability to generate a German SO form. This means that our German users can have a more native experience when using our platform!

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Next is a much-requested feature from our users: the ability to add comments to transaction lines. After this update, you can now leave comments on any of your transaction lines, as well as delete any. Each comment will have a timestamp associated with it, so you can keep track of any notes you’d like to make! We’re also working hard on giving you the ability to edit comments, and filter by comments, so keep an eye out there.

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We thought we’d wrap this product update blog up with a big one… We are happy to announce we now have ERC-1155 token support in-app for Arbitrum, Avalanche, Binance Smart Chain, Ethereum, Fantom and Polygon networks! This is huge news for anyone deep into NFT trading, as you’ll now be able to track minting and selling ERC-1155s on these networks, as well as converting an ERC-721 to a ERC-1155.

De informatie op deze website is van algemene aard en houdt geen fiscaal, boekhoudkundig of juridisch advies in. Het is opgesteld zonder rekening te houden met uw doelstellingen, financiële situatie of behoeften. Voordat u op basis van deze informatie handelt, dient u de geschiktheid van de informatie te overwegen, rekening houdend met uw eigen doelstellingen, financiële situatie en behoeften, en professioneel advies in te winnen.
Summ (voorheen Crypto Tax Calculator) wijst alle garanties, toezeggingen en garanties af, expliciet of impliciet, en is niet aansprakelijk voor welk verlies of welke schade dan ook (inclusief menselijke of computerfouten, nalatigheid of anderszins, of incidentele of gevolgschade) voortvloeiend uit of in verband met, enig gebruik van of vertrouwen op de informatie of adviezen op deze website. De gebruiker moet als enige de verantwoordelijkheid aanvaarden die verband houdt met het gebruik van het materiaal op deze site, ongeacht het doel waarvoor dergelijk gebruik of dergelijke resultaten worden toegepast. De informatie op deze website is geen vervanging voor gespecialiseerd advies.

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