Tax Efficient Ways To Manage Your Money Through Crypto

In today’s fast-moving world, it is important to stay up-to-date with the latest financial news and updates. One of the most recent financial updates is cryptocurrencies or crypto as some might call it, so what exactly is crypto and what is so popular about it?

What is Crypto?

Crypto, or cryptocurrency, is a form of digital asset that can be used online for the exchange of goods and services. There are more than 6,700 different cryptocurrencies that are being traded publicly. Some of the most popular types of crypto include:

  • Bitcoin (BTC)
  • Litecoin (LTC)
  • Ethereum (ETH)
  • Cardano (ADA)


Cryptocurrency trading is becoming more and more popular and it has become one of the strongest performing asset classes over the last 3 years, this has mainly been a result of more people becoming aware of the benefits that investing in crypto can have. Like all investments, cryptocurrency can create short-term volatility, however, it can also demonstrate healthy returns to investors in the long term.

Crypto is becoming increasingly popular as it is believed to be the currency of the future. Many people invest in different types of cryptocurrency when they are at a low value and then sell them when they become more valuable to benefit from the profit.

Why is Crypto becoming popular?

Most cryptocurrencies remove the central banking element from managing money supplies meaning that the value of crypto doesn’t change with inflation. Many people invest their money in crypto as it could be considered a good way of holding the value of your money over time and potentially increasing the value of your initial investment.

As well as the monetary value, crypto could be viewed as more secure than a traditional payment method as it uses a technology called blockchain which is a decentralised processing and recording system that is thought to make payments more secure.

On the other hand, just because your money won’t be affected by inflation when it is invested in crypto, this doesn’t mean you completely avoid losing the value of your investment. Investing in crypto is considered an asset by HMRC which means that you are still subject to paying tax on any gains you make, but there are different ways to ensure that you are tax-efficient when trading crypto.

Tax Implications

If you are looking to invest your money in cryptocurrencies, it is worth considering the tax implications of purchasing crypto. 

Most people buy and sell cryptocurrencies as an investment in hopes that they will receive a profit, but many are shocked when they receive a letter from HMRC stating that they owe a large sum of crypto tax, but how much tax should you be paying?

Below are the current tax bands set by the Government for any gains made on investing in crypto:

  • 20% on any profit between £12,571-£50,270
  • 40% on any profit between £50,271 – £150,000
  • 45% on any profit over £150,000


What can I do to limit the tax implications?

There are different reputable established structures that you can take advantage of to try to minimise your tax liability and ensure you do not end up paying more tax on the profits you have made than necessary. 

One way to make sure you are efficient when paying tax on crypto is to use a Directors Loan ISA. Utilising this method means that you would pay less tax on any potential gains than you would if you had bought crypto with your own personal funds.

It’s a very simple process – once you have set up your Directors’ Loan Account ISA then you can fund it either using personal cash or by transferring funds from an existing ISA you may have, then you can loan the money from your Directors’ Loan ISA to your business. Once the money has been transferred to your company bank account you are ready to use the funds to make an investment, or you can use part of your fund to buy crypto with Dacxi.

Here at Dacxi, we have opened up our platform so that it works with a Directors’ Loan Account (DLA) ISA – this is an ISA that contains peer-to-peer loans, instead of cash. A DLA ISA is a type of innovative finance ISA that allows you to use your ISA allowance to lend to your company, this allows any potential profits to be more tax-efficient than if you had bought crypto using your own personal funds.

In summary, lending to your company via the DLA ISA allows you to pay tax-free interest from the company, so you can extract some of your profits as a tax-free passive interest income.

What is the process of setting up and running a DLA ISA?

To set up your DLA ISA you can follow this link to use a platform provided by our partners and you will need to provide all the information required to set up the ISA which should take no more than 12 minutes to complete.


Another way to ensure you are tax-efficient with crypto is to use your SSAS pension to buy crypto with Dacxi, but what exactly is SSAS?

SSAS stands for ‘Small Self-Administered Scheme’ and is a type of defined contribution pension that an employer can self-manage on behalf of up to 11 members. Typically, an SSAS pension scheme is set up by the owners of a business who wish to gain more control and power over how their pensions are invested.

If you’re a UK business owner and you would like to diversify your portfolio, here at Dacxi we offer the option to move your Small Self-Administered Scheme (SSAS) pension into cryptocurrency via our platform.

How does it work?

If you have an existing SSAS pension, you can diversify a portion of your funds into crypto using the new SSAS pension route from Dacxi. Even if your existing SSAS is not set up to incorporate crypto, we can help make it happen.

When traditional markets fall, whether due to a global pandemic or banking crisis, pension values tend to drop. That’s why here at Dacxi, we saw an opportunity to create a relationship with SSAS pension providers, to give you a brand new option for your pension. The best part is, you don’t have to use your entire pension – you decide what amount you’re comfortable moving into crypto.

What’s next?

1. Contact your pension provider. If your current pension company does not deal with SSAS related pensions, please e-mail and we can introduce you to a suitable SSAS provider.

2. Complete the transfer process. Your SSAS provider will work with you to do this, you just need to decide what amount you’d like to move into crypto.

3. Pension funds will appear on your Dacxi pension exchange account. Once the transfer has been made by your SSAS provider, the funds will be loaded into your newly created Dacxi pension exchange account.

4. Choose your preferred Dacxi crypto package. We currently offer three options: Blue Chip Bundle, Precious Metals Bundle and our Blue Ocean Bundle.

Once purchased, your crypto assets will be stored in your digital wallet on the Dacxi platform. Dacxi has earned an independent A+ security rating; the highest security rating possible. So you can rest assured that your crypto pension assets will be safe and secure with Dacxi.

So whether you’re new at investing in cryptocurrencies, or you have been knocked back by a letter from HMRC, we can help you manage your crypto investment in a tax-efficient way.


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