On Nov. 1, Her Majesty’s Revenue and Customs (HMRC), in charge of taxes and other monetary policies released an updated version of its tax policies. It clarified the U.K.’s stance on cryptocurrencies. And disclosed its plans to tax individuals and businesses involved with digital assets.
The updated guidelines shed light on how HMRC views crypto trading. Particularly, matters pertaining to taxes, filing tax returns and accounting practices, etc. It also evaluated the taxation of exchange tokens. And stated that the security token regulations will be soon included.
There is a special request concerning businesses that buying or sell tokens, trade them for other assets and receive payments for goods or services in them. They have to pay one or more types of tax. The different forms of taxes available include income tax, national insurance contributions, corporation tax, capital gains tax and stamp taxes.
Crypto isn’t money
The guideline illustrated different forms of tax. It is important to note that HMRC does not in any way view crypto as a currency or “stock or marketable securities.” With this in mind, cryptocurrency should not have to pay stamp taxes. The updated guideline, however, added that, since crypto is used in debit transactions, the traders will still have to do it.
Prior to this time, HMRC only considered crypto transactions as gambling. HMRC further added that it will closely analyze every movement before applying the relevant tax provisions, instead of depending on just theoretical conclusions.
In August, HMRC allegedly asked crypto exchanges to submit lists of customers’ identities and transactions. The agency is looking to solve the suspected issue of tax evasion on digital asset trading platforms. Undisclosed sources aware of the situation revealed that HMRC is only asking for records from the last two to three years. This means that taxation policies will not affect early investors.
HMRC first released its crypto taxation guidelines for individuals in December 2018. The guidelines explained taxation in relation to airdrops, forks, and mining. HMRC also instructed businesses to keep track of all crypto transactions in Pound Sterling. They will also need to keep track of the amount spent on every exchange token.
The United Kingdom has over time shown a great deal of interest in crypto. This recent taxation guidelines show crypto is getting the attention of regulators worldwide.