Nothing in this article should be seen as Financial Advice for you Personally. All Information is correct at time of writing (October 2021) and is based on the HMRC .gov website and their guidance specifically for NFTs. Link Here
Not on the NFT, no.. But as far as HMRC are concerned, when you Purchase an NFT, you have "Realised" a gain or loss on the value of the Crypto that you used to purchase the NFT. This gain/Loss is against the value of the British pound (GBP) and is considered a "Capital Gain" therefore Capital Gains Tax (CGT) applies. In accounting speak, a loss is just a negative figure against a gain when using terminology. Keeps it simple.
So, HMRC basically views Crypto and NFTs as Shares in companies. Fungible "Tokens" like ADA, are treated as one company and each individual NFT is a separate company.
There are 2 methods used to work out your Tax liability when purchasing an NFT using Crypto. Which one to use is based on the timescale between purchase of the crypto and the Sale of the crypto (exchanging it for an NFT). This NFT purchase is the moment you realise the gain.
The 2 methods are:
1.) Averaging the total value of the crypto at purchase over multiple purchases
2.) the Bed and Breakfast rule (Recording the exact cost of the crypto when you bought it.)
The method employed is a nice simple one.. Did you purchase the "Shares" in the Crypto more than 30 days prior to buying the NFT?
If yes, then you can use the Pooling method. (Crypto Holdings over 30days old can be segregated as Section 104 hollding.) This is basically your pool.
If no, then you need to use the bed and breakfast rule. Which means you need to use the exact cost paid to work out cost price.
If you were gifted the Crypto, you need to use the market price on the day you received the Crypto.
You can use "Allowable costs to help reduce your total liability
Any cost associated with the purchase of both the Crypto and the NFT. Transaction fees/Advertising costs etc... If you are unsure, do some research or ask an advisor if a cost is allowable.
In terms of the transcation, no.. But did you know that everyone in the UK has a CGT allowance just like they do Income Tax allowance? The total allowed for each year is £12,300. This means that once you have worked out the profits made, if they are less than this figure, you do not need to pay extra taxes? Be careful though, Crypto Gains are not the only Captial Gains you can make, for example, you could be already using the allowance for the current tax year if you sold a second home..