Tax on cryptocurrency earnings has become an important factor at year’s end, which many UK cryptocurrency investors will soon find out as their 31 January deadline approaches.
New regulations created in 2018 means that this month’s tax returns will need a little more care when completed by crypto enthusiasts and exchanges as well, although companies are still awaiting more details.
Published on 19 December, the comprehensive guide detailed the circumstances or instances in which a crypto holder, trader or someone who receives payment in the form of crypto would need to pay taxes. At present, Her Majesty’s Revenue and Customs (HMRC) guidelines refer simply to individuals. Tax guidelines for crypto assets in businesses or utilized by businesses are due to be published at some unspecified point in the future. HMRC also notes that the “tax policy may evolve as the sector develops”.
For investors though, at the end of this month, those who have sold their crypto assets will be liable for paying Capital Gains Tax (CGT) provided that their assets have appreciated and a profit has been recorded. However, there is some good news for many small investors as CGT is exempt below the sum of USD 14,625. HRMC has indicated that the percentage on chargeable assets may be as high as 20%, wholly dependent on the tax rate of the returnee.
In an attempt by HMRC to tighten up on profits incurred through cryptocurrency trading, those filing their returns this month will have to give specific details of some of their transactions including type of cryptocurrency asset, date of the transaction and type, number of units, the value of the transaction and the cumulative total of units. HMRC have said that they will also be requiring bank statements and wallet addresses as part of the 2018 return.
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