The United Kingdom has published the policy paper titled ‘Cryptoassets for Individuals’ on December 19th. The UK Government tax agency ‘Her Majesty’s Revenue & Customs'(HMRC) which is responsible for tax and revenue, stated that cryptocurrency holders would be taxed as per the current income tax law.
The UK government assumes that most individuals hold digital assets like Bitcoin (BTC) or other cryptocurrencies to make a profit. The crypto investors or holders are required to pay capital gain tax.
According to the UK government policy paper:
“In the vast majority of cases, individuals hold cryptoassets as a personal investment, usually for capital appreciation in its value or to make particular purchases. they will be liable to pay capital gains tax when they dispose of their cryptoassets.”
Her Majesty’s Revenue & Customs (HMRC) have stated that the policy paper is not a finished document and therefore a more official policy should be set; it seems that HMRC is focusing on cryptocurrency holdings for individuals and not for businesses or companies.
HMRC writes “As such, HMRC will look at the facts of each case and apply the relevant tax provisions according to what has actually taken place (rather than by reference to terminology). Our views may evolve further as the sector develops.”
The HMRC also notes that every crypto holder is responsible for their private keys. If in case the private key is lost, these holders can communicate the loss of private keys to the authority.
HMRC is moving in the right direction by recognizing cryptocurrencies as a legitimate form of money, which would also be liable to tax. Although HMRC still believes that digital coins are genuine, they are hesitant to disclose it publicly.
The cryptocurrency investors who buy cryptocurrencies based on speculation will be subjected to pay capital gains tax, only when they sell their crypto coins. If you receive any crypto tokens or coins as a form of payment, whether be it from your employer, from mining, airdrops, or even transaction fees, you are liable for standard UK income tax and national insurance laws.
Will the new tax guidelines benefit cryptocurrency investors? Share your thoughts in the comment.