Here’s a clear and practical guide on the taxation of currency in UK, covering foreign currency, copyright, and currency trading—the main areas where tax typically applies.

UK Taxation of Currency: A Simple Guide

Foreign Currency: Individuals & Businesses

• Personal Currency Gains (Forex)

  • If you buy foreign currency for personal use (e.g., travel, shopping) and make a profit when exchanging back to GBP, this is not taxable.

  • HMRC sees this as an incidental transaction.

• Business Currency Gains

  • If your business deals in foreign currencies (e.g., imports, exports, international sales):

  • Exchange rate gains or losses may affect taxable profits (usually reflected in your company’s profit & loss account).

copyright (Bitcoin, Ethereum, etc.)

• HMRC treats copyright as property (assets)—not as currency.

• The main taxes that apply:

  • Capital Gains Tax (CGT) for individuals when you sell, trade, or gift copyright.

  • Income Tax may apply if:

    • You’re mining copyright.

    • You receive copyright as payment for goods/services.

    • You engage in frequent trading that resembles a business.

• Key points:

  • You get an annual CGT allowance (2024/25: £3,000 for individuals).

  • Losses can be used to offset gains.

  • Keep accurate records of:

    • Date of transaction

    • Value in GBP

    • Amount of copyright

HMRC has detailed copyright tax guidance here:
https://www.gov.uk/government/publications/tax-on-cryptoassets

Currency Trading (Forex Trading)

• Casual Forex Trading (Individuals)

  • If you trade casually on the side (e.g., using a trading app), profits are typically taxed under Capital Gains Tax rules unless the frequency is very high.

• Professional/Full-time Forex Trading

  • If trading is frequent and organized, HMRC may classify you as self-employed, and profits would be taxed as income (Income Tax + National Insurance).

  • No Capital Gains Tax allowance would apply in this case.

• Spread Betting & CFDs

  • Profits from spread betting (with regulated UK providers) are generally tax-free in the UK.

  • However, Contracts for Difference (CFDs) are subject to Capital Gains Tax.

Other Currency Considerations

• Gifts of Foreign Currency: Normally not taxed unless it results in capital gain when converted back.

• Inheritance Tax (IHT): Applies to the value of foreign currency or copyright assets as part of the estate.

Tax Rates Summary (2024/25):

Tips to Stay Compliant:

Keep detailed records of every currency or copyright transaction.
Use HMRC tools or professional accountants to calculate gains/losses.
Report through Self-Assessment if you owe tax.
Be mindful of foreign currency accounts held abroad—they may have reporting obligations.