What The HMRC’s Cryptoasset Data Request Means For You

What The HMRC’s Cryptoasset Data Request Means For You

The main tax authority in the UK, Her Majesty’s Revenue and Customs, have applied to leading exchange platforms in order to find out whether cryptocurrency investors own any unpaid capital gains and income tax.

According to reports, three leading exchange platforms, CEX, EToro and Coinbase, have all been targeted by the HMRC seeking users’ transaction history to uncover whether they have made a profit on their cryptocurrency investment.

This is new move from the authority is believed to be them following in the tracks of their US counterpart, IRS. Who, earlier this year, directly contacted 10,000 cryptocurrency owners who could potentially owe the government unpaid tax.

How Could I Be Affected?

While the HMRC website states that it “does not consider cryptoassets to be currency or money”, it also explains that the “tax treatment of all types of tokens is dependent on the nature and use of the token and not the definition of the token”. As such, there is no blanket exemption from tax rules for UK crypto investors and it is all dependent on the type of crypto that is held.

The important thing to consider though is tax issues arise not upon purchasing or holding of crypto assets, but the selling. This brings into force the rules of capital gains if traders have made a profit. A £12,000 allowance for annual gains made from trading is currently permitted. With this in mind, it would be traders who are making a significant profit who are going to be at the heart of this new investigation.

The tax rules will see traders on the basic rate end of this scale pay around 10% on these earnings, but those who fall into a higher bracket should pay around 20%. This could increase to as much as 40%-45% if more than £50,000 has been accumulated.

It is believed that the transaction history that will be investigated by the HMRC will only go back 2 years, supposedly from April 6, 2017, through to April 5, 2019. As such, this would exempt those who were early to industry, but could still catch many who had significant profit during the bitcoin boom of 2017, as well as those who have made a tidy profit over the last few months of bullish market behaviour.

Gary McFarlane, a cryptocurrency expert at investment platform Interactive Investor, when speaking to UK Newspaper, The Sun, explained, “those who hoped to avoid tax by simply not declaring income on the assumption that bitcoin or another crypto is anonymous are in for a rude awakening.”

Will It Actually Happen?

Due to the fact that the HMRC work in conjunction with Financial Conduct Authority (FCA), they are in their rights to request such information, but whether exchange platforms are obliged to give the data up is a different matter.

However, of course, with the cryptocurrency world being a new industry and the fact no such request like this has been made before, the situation is still a grey area. With this mind, this move from the HMRC and the reaction from the exchange platforms will likely set a precedent for future tax years.

Currently, it is believed platforms are contemplating their next move, with CEX.IO stating they are investigating whether it must meet the tax man’s demands.

There is a £1000 fine for those who do fail to provide adequate tax returns. But, of course, traders can opt to provide their earnings voluntarily, with the possibility also to minimise tax on these earnings. This can be done by doubling your capital gains tax by sharing it with a spouse or by deducting any losses you’ve made from your gains.

Recently Similar News

cex-promotion exmo-promotion

Latest Guides

Latest News

Cryptocurrency,Trezor,Updates,Wallets

Trezor Explain Why You Should Use Their New Buy Service

Cryptocurrency wallet, Trezor have launched a new buy service on their platform and have detailed how it can benefit you. The new service will simultaneously help traders whether they are looking to hodl, invest, build your portfolio, or send money abroad directly via the service. To make sure you know exactly why you should use […]

13 November, 2019
Blockchain,CoinEx,Decentralised,Updates

CoinEx Chain Mainnet Goes Live Alongside New CoinEx DEX

CoinEx’s own native chain, the CoinEx Chain officially went live yesterday afternoon. The launch of the mainnet was 7 months in the making but it is now up and running, following a series of tests and a tour of Asia. During these tours, they spread the word of their native public chain and simultaneously attempted […]

12 November, 2019
CEX,Giveaway,Promotion

CEX Announce Creativity Awards For Users

To celebrate their 6th year of operation, CEX.io are giving users the chance to win prizes by sharing their creativity with the platform. This event will see them reward their users for the loyalty they have shown over their history simply for sharing their creative prowess with the exchange. The concept is quite simple – […]

11 November, 2019
DeversiFi,Exchange Platforms,Updates

DeversiFi Reveal First Month Performance Report

DeversiFi, the re-brand of popular platform Ethfinex, yesterday revealed the details of their first-month operations in their new format. Already the new-look platform has set about making its presence known in the world of cryptocurrency and blockchain. At the end of September, they assisted an EU commission that focuses on digital asset regulation, before last […]

10 November, 2019
Closure,Decentralised,DX.Exchange

DX.Exchange Have Closed “Temporarily”

DX.Exchange has closed its door as they attempt to find a “merger or outright sell of the company”. The news will come as a surprise to some as it has seemed all systems go for their native DXCASH and Turbo Token. However, this has seemingly not taken off in the way they had expected as […]

9 November, 2019
Changelly,Giveaway,Promotion

NEXO Giveaway Now Live at Changelly

Users will be able to benefit from a new giveaway at Changelly where they can win their share of 15,000 NEX. The two firms have been partners for some time. With Changelly’s low commission fee rates and NEXOs low interests combined making for a very price friendly trading experience when then the pair are used […]

9 November, 2019
Event

AIBC Summit Malta – Autumn Edition: Day 2

After what was undoubtedly a fantastic first day from the third edition of the AIBC Summit in Malta, our team at Cryptimi was all geared up for yet another eventful and insightful day. Just like the first day, we were literally spoilt for choice. So, we huddled up and came up with a practical game […]

8 November, 2019
Exmo,EXMO Coin,IEO,Promotion

EXMO Announce Series of Details about EXM IEO Third Round

The third and final IEO round for EXMO’s native coin, EXMO Coin (EXM) is scheduled for next Wednesday. In anticipation of this, the platform has announced important details about how and where you can get involved, as well as new incentives to do so. As previously reported, EXM is ready for its final IEO round […]

8 November, 2019