- The UK has expanded its Investment Manager Exemption rule to include cryptocurrencies
- The expansion allows foreign crypto buyers to avoid UK taxation by using British asset managers
- The move is the first notable step by Prime Minister Rishi Sunak to make the UK a crypto hub
The UK has offered a tax exemption for foreign investors purchasing crypto through British investment managers or brokers as part of the region’s push to become a crypto hub. The existing Investment Manager Exemption rule has been broadened to include cryptocurrencies, which means non-resident investors can use UK-based investment managers to buy cryptocurrencies without incurring UK taxation for themselves. Prime Minister Rishi Sunak introduced the idea of the UK being a crypto hub in April last year when he was Chancellor of the Exchequer, and he has already started on this path with the expansion of this rule.
Non-UK Crypto Buyers Can Bypass Tax
When Sunak’s plans were revealed in April last year, few details were offered as to how the UK would go about becoming a crypto hub. The expansion of the Investment Manager Exemption rule to include crypto is an example of how he wants to get the ball rolling, with two benefits offered for foreign crypto and non-crypto investors alike:
- Overseas investors are not charged to UK tax for investment transactions conducted on their behalf
- Any fees received by a UK resident investment manager for services performed for the non-resident are fully chargeable to UK tax
The UK government says that only investments in “designated cryptoassets” can make use of the new rule. While this sounds like it will be judging individual coins as to which ones make it in and which ones don’t, the criteria is more to do with the transactional side of things and the residential status of the person buying it.
In an email to Coindesk, HM Revenue and Customs explained that the purpose of the tax break was to “build upon the U.K.’s position as an investment management hub” and utilize the UK’s position as a financial powerhouse to include the growing cryptocurrency market.
