Countries from all around the globe are starting to take a stance towards cryptocurrency taxation, but some are taking it a bit more seriously than others. Late last week, Her Majesty’s Revenue and Customs (HMRC) updated its crypto tax guidelines for businesses and individuals, clarifying when you pay tax on crypto engagements. Back in December, HMRC issued its first guide towards crypto tax, but this new revamp has changed a number of items within the system, so make sure you know where you stand come tax time.
Crypto Isn’t a Currency, Apparently
Like it or not, cryptocurrencies have yet to be adopted to a level where they can be truly considered a currency in the broadest of terms. While adoption is still growing every day, there are still not enough businesses accepting them, and not enough people using them for day to day activities. It appears as if the HMRC is taking the same stance towards cryptos, as it defined them as “cryptoassets” throughout its latest update. As such, when trading crypto or using it to pay for items, people and businesses are to apply capital gains taxation.
Earn Crypto? Pay Income Tax
The paper went on to state that if an individual earns a crypto salary or receives rewards from mining, then traditional income tax laws are to be applied. This doesn’t come as a shock and should be more common sense from the British public. We expected to see this added and it’s the right type of taxation to be applied to these transactions. While there are still ways an individual might be able to use crypto to evade paying part or all of their taxes, these new statements will set the law so that appropriate action can be taken against tax evaders within England.
So, while this might come as bad news for some people, in fact these regulations help clear up the crypto tax situation and give you a solid framework to work within. Now the rules are clear, there is no excuse to not pay the correct taxation on your cryptoassets, but also there is more wiggle room when it comes to tax avoidance using cryptoassets. We don’t advocate tax evasion and avoidance, but these new updates to the British crypto taxation certainly give you a solid overview of how the system will work. How you use the system is totally up to you.