The UK government has clarified what taxes it thinks cryptocurrency investors are liable for…
The British government has hardly held open welcoming arms for cryptocurrency businesses and investors so far, but it has shown increasing signs of engaging with the community. Now, it’s given some clear financial guidance for those who invest in or deal with crypto.
An official document has been released by HM Revenue & Customs in the UK, by the name of ‘Cryptoassets for individuals’. It’s the culmination of a lengthy consultation period, and it’s provided guidelines on tax liabilities.
As the introduction to the document states, “This paper sets out HMRC’s view – based on the law as it stands at the date of publication – about how individuals who have cryptoassets are taxed. It does not explicitly consider the tax treatment of cryptoassets held for the purposes of a business carried on by an individual”.
The document concludes that for the majority of those involved in cryptocurrency, it’s capital gains tax that they would be liable for. That’s because HMRC has come to the not unreasonable conclusion that most people tend to held cryptocurrency as some form of personal investment.
That said, income tax and national insurance comes into play too. The document confirms that those taxes will apply if employees are paid in some way via a crypto asset (so, if your salary is paid in Bitcoin, for instance), or for monies earned via crypto mining or airdrops.
HMRC does confirm that it doesn’t deem cryptocurrency buying and selling to be a form of gambling, thankfully.
The full document can be found on the UK government’s official website, here.