UK Tax Collector Says How Crypto Holders Will Pay Taxes

UK Tax Collector Says How Crypto Holders Will Pay Taxes

“But in this world nothing can be said to be certain, except death and taxes,” said Benjamin Franklin in a letter to Jean-Baptiste Leroy, 1789. Well, The United Kingdom has just made crypto holders to remember that.

No matter how unanimous are crypto investors, they are going to pay taxes. At least, it is what the Her Majesty’s Revenue and Customs (HMRC) agency said this week as they published guidance on how crypto holders will pay taxes.

In a report published Wednesday, the HMRC explained how individuals possessing crypto assets would be taxed, not corporations. The government agency said it would release another guidance on a later date talking about taxation on tokens held by companies.

“Cryptoassets for individuals,” a policy paper published 19 December, covers all kind of tokens in possession of individuals. However, the tax treatment depends on the nature and use of tokens, but not the definition of the token.

“HMRC does not consider cryptoassets to be currency or money,” says the paper. “This reflects the position previously set out by the Cryptoasset Taskforce report (CATF). The CATF have identified three types of cryptoassets: exchange tokens, utility tokens, and security tokens.”

The agency taxes cryptos based on what people do with it. As a sample, “If the holder is conducting a trade then Income Tax will be applied to their trading profits.” Also, depending on frequency, organisation and sophistication.

“A trade in cryptoassets would be similar in nature to a trade in shares, securities and other financial products,” the HMRC said.

Mining will also be taxable regarding the degree of activity, organisation, risk, and commerciality. “The pound sterling value of any cryptoassets awarded for successful mining will be taxable as income with any appropriate expenses reducing the amount chargeable.”

Also, if individuals decide to keep the crypto awarded from Mining, they will have to pay capital gains tax when they later dispose of them. All fees or rewards received in return for mining are taxable.

Blockchain Forks and Losses

The HMRC also covers hard and soft forks. “A soft fork updates the protocol and is intended to be adopted by all. No new tokens, or blockchain, are expected to be created,” the agency highlights.

“A hard fork is different and can result in new tokens coming into existence. Before the fork occurs there is a single blockchain. Usually, at the point of the hard fork a second branch (and therefore a new cryptoasset) is created,” HMRC explains.

As for taxation matters, the value of the new crypto asset created in the fork will be derived from the original crypto that was held by the investor. Costs must be split.

Regarding losses, “if an individual disposes of cryptoassets for less than their allowable costs, they will have a loss. Certain ‘allowable losses’ can be used to reduce the overall gain, but the losses must be reported to HMRC first.”

Losses will be possibly accepted if investors claim that their crypto assets have “negligible value.”

The United Kingdom Cryptocurrency Task Force

United Kingdom special agents are not only James Bond or Austin Powers, but also Tax collector officers.

Previously this year, the United Kingdom Chancellor of the Exchequer Philip Hammond launched the “Crypto Assets task force” in an effort to promote blockchain and crypto market but also to fight against tax evasion from crypto holders.

The Crypto assets task force will include the Bank of England, the UK Treasury, and the Financial Conduct Authority.

Back in the year, Hammond affirmed that the task force “will help the United Kingdom to manage the risks around Cryptoassets, as well as harnessing the potential benefits of the underlying technology.”

Recently Similar News

casinoin-promotion etoro-promotion

Latest Guides

Latest News

KuCoin,Margin Trading,Promotion,Smart Contracts

1 Million USDT Rewards Up For Grabs at KuCoin

KuCoin are set to launch USDT Perpetual Contracts on their KuMEX product and to celebrate they are offering big rewards to their users. 1 Million USDT will become available in total in two giveaway activities that will begin on 00:00 on April 6, 2020, and will run until 23:59:59 on April 12, 2020 (UTC+8). The […]

6 April, 2020
Europe,Investment,Regulation,Trading

XTB Alerts Traders of Trading Time Changes

There have been some important time changes in Mexico, Chile and Australia will affect when the market is open for trading. The trading time changes have come as a result of the daylight saving hours that have been implemented in the three aforementioned countries. While European nations made the changes last week, these countries made […]

6 April, 2020
Exchange Platforms,Margin Trading

Poloniex Margin Trading is Expanding

Poloniex have been busy this week promoting their new margin trading service on their Twitter page. Margin trading became the must-have feature on exchange platforms last year, with many different platforms adding the feature – one of which was Poloniex. This week saw a lot more additions their version of margin trading and they have […]

5 April, 2020
CFD Trading Platform,eToro,Investment,Social Media

eToro Have Launch New Podcast: “Economize Me”

eToro have begun a new podcast called “Economise Me” which aims to help traders with their financial literacy. The multi-faceted trading platform announced the new podcast on their Twitter account on Friday and so far, the show had produced three normal episodes and one coronavirus special. Each video will feature world-leading industry experts who will […]

5 April, 2020
Assets,Cryptocurrency,Exchange Platforms,EXMO

EXMO Complete Second Native Token Burn

EXMO have completed the second-ever burn of their native token, EXMO Coin (EXM). EXM first launched back in July 2019 over a staggered release which saw the platform conduct 3 IEO rounds before the coin officially hit the market. Although the token is way down the list on Coinmarketcap, it does have special privileges for […]

4 April, 2020
AvaTrade,CFD Trading Platform,Investment,Trading

CFD Platorms Cite Oil As This Weekend’s Important Asset

Two CFD trading platforms have drawn attention to the value of oil and explained why it should be on the savvy traders shopping list this weekend. Both AvaTrade and Trade.com have shared similar sentiments about the need to get involved with oil as the price is currently its lowest in 20 years. Oil’s price has […]

4 April, 2020
Binance,Exchange Platforms,Promotion

Win $1,000,000 at Binance Futures

Binance Futures has launched a new trading tournament where a prize pool of up to $1,000,000 worth of BNB tokens is up for grabs. This will be the second tournament that the platform has launched for their expanding project following a similar event taking place in January. This one is set to launch next week […]

3 April, 2020
Crypto Wallets,Promotion,Trezor

Last Day To Save 15% on Trezor Wallets

Trezor’s STAYSAFE Promotion is set to end within the next 24 hours.   If you have missed both of our two news post so far about the on-going promotion at Trezor where traders can save 15% when buying either one of their top quality hardware wallets – the Trezor One or the Trezor Model T -then […]

3 April, 2020