Cryptocurrency is starting to create quite the reputation for itself as it is starting to not only get recognized, but is now also accepted by some governing bodies globally. Specifically, in the United Kingdom, whilst it is not accepted as money or currency, it is accepted as property. Therefore, since property in the UK is taxed as either Capital Gains Tax or Income Tax, cryptocurrency will follow the same criteria. Accounting service with Best UK Crypto Accountants. Experience in tax consulting and about Tax regarding Stablecoins to Buy Crypto.
Article CRYPTO40050 of the HMRC Internal Manuals (published on March 30, 2021 and updated on November 22, 2021) states that a business, organisation or company “carrying out activities which involve exchange tokens” are accountable to pay tax accordingly.
These activities include:
- Offering goods and services in exchange for tokens
- Buying tokens
- Selling tokens
- Exchange tokens for other types of assets
The article also mentions that “the type of tax will depend on who is involved in the business and the activities it carries out (including whether these activities count as a trade)”. Additionally, it will also depend on the business’ income, profits, gains and expenses. So, those engaging in the above activities will be liable to pay one (or a combination) of the following taxes:
- Capital Gains Tax (CGT)
- Income Tax (IT)
- Corporation Tax (CT)
- Corporation Tax on Chargeable Gains (CTCG)
- National Insurance Contributions
- Stamp Taxes
GENERAL INFORMATION ABOUT CRYPTOCURRENCY TAXATION
Following a brief introduction about cryptocurrency taxation, here is some needed information about Cryptoassets in the UK:
- It is important to keep tax deadlines in mind. The latest tax deadline to be announced involved any individuals or businesses who were involved in buying or selling Cryptoassets between the UK tax year of April 6, 2021 and April 5, 2022. Details had to be declared on their respective 2021-2022 Self-Assessment Tax Return.
- It is important to note that the HMRC is probably aware of your cryptocurrency activities, especially if you have had any activity with a cryptocurrency-designated service provider in the UK. In fact, in 2020, Coinbase shared data of UK customers involved in cryptocurrency between 2017 and 2019.
- Since the HMRC is taking Cryptoassets much more seriously, they will be delivering letters to all individuals and businesses involved in cryptocurrency regarding any undeclared gains.
Therefore, it is crucial to have a taxation company with licensed and experienced accountants to understand your Cryptoassets and give you the right information as to the respective tax to be declared.
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