Individuals whose cryptoasset activities amount to a trade (rather than just passive 'invest and hold') can reduce their income tax liabilities by offsetting any losses from their crypto trade against other taxable income.
Normally traders can carry back losses one year - relieving them against general income of the previous tax year - as well as relieving them against current year's general income, and future years trading profits.
However, with the recent, temporary extension of the loss carry-back rule, crypto traders making losses in 2020/21 and 2021/22 may be able to relieve those losses against general income from as far back as the 2017/18 tax year.
If your crypto profits are taxed under the miscellaneous income rules, however, any losses cannot be carried back - but may still be able to be carried forward and relieved against future income.
Read our other articles on cryptoasset taxation here.
Contact us today or visit our Edinburgh or Kirkwall offices for assistance.