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UK Tax Agency Publishes Policy Paper On Taxing Crypto Assets

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The British tax agency has published a report explaining how individuals possessing crypto assets might be taxed on their holdings.

Individuals who hold crypto assets as a personal investment will be liable to pay Capital Gains Tax on any gains they realize, and when they dispose of their crypto assets.

They will be liable to pay Income Tax and National Insurance contributions on crypto assets which they receive from their employer as a form of non-cash payment, mining, transaction confirmation or airdrops.

In cases of taxable profits from a financial trade in crypto assets, Income Tax would take priority over the Capital Gains Tax rules.

HMRC made it clear that it does not consider the buying and selling of cryptoassets to be the same as gambling. A trade in crypto assets would be similar in nature to a trade in shares, securities and other financial products.

If the crypto mining activity does not amount to a trade, the pound sterling value of any crypto assets awarded for successful mining will be taxable as income.

Any disposal of the crypto asset received through employment may result in a chargeable gain for Capital Gains Tax, the policy paper says.

HMRC said it does not consider crypto assets to be currency or money.

Her Majesty's Revenue and Customs (HMRC), the government agency responsible for collecting taxes, did not outline the tax scheme for cryptoasset transactions involving businesses and companies. Guidance on that will be published at a later date, says the policy paper titled "Cryptoassets for individuals".

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