The government of the United Kingdom has recently made it known that individual crypto investors will be expected to pay capital gains tax each time they sell crypto assets such as Bitcoin for profit.
Her Majesty’s Revenue and Customs (HMRC) Publish New Guidelines
According to the newly published taxation guidelines, Her Majesty’s Revenue and Customs (HMRC) made it known that cryptocurrencies collected from employer instead of cash or cryptos gained from mining activities and airdrops will be taxed in accordance to the income tax and national insurance contribution laws already in existence.
The HMRC further explained that:
“The tax treatment of crypto-assets continues to develop due to the evolving nature of the underlying technology and the areas in which crypto-assets are used,”
It continued that:
“As such, HMRC will look at the facts of each case and apply the relevant tax provisions according to what has actually taken place (rather than by reference to terminology),”
The British tax agency has made it known repeatedly that it considers cryptocurrency more of a property than a currency. As a result of this, capital gains payable on cryptocurrency sales is between 10 percent and 28 percent, but this depends on the rate of income of the taxpayer.
According to the new taxation guidelines, “Investors who earn money from mining, airdrops, or transaction fees as a reward for services provided or expected to rendered are required to pay income tax and add to the national insurance scheme.”
HMRC further stated that:
“In the vast majority of cases, individuals hold crypto-assets as a personal investment, usually for capital appreciation in its value or to make particular purchases. They will be liable to pay capital gains tax when they dispose of their crypto-assets.”
The taxation guidelines released by HMRC will help prevent tax evasion and unpredictably collect tax especially on an asset class that has always found a way to wriggle its way out of getting adequately regulated. Taxation related to forked digital coins, stolen assets, lost private keys, and others were also discussed in the new taxation guidelines.