Cryptocurrencies have gained significant attention in recent years, not only as a form of investment but also as a means of payment. With this rise in popularity, HMRC has been closely monitoring the taxation of cryptoassets ...
This also means that individuals who hold cryptoassets for personal use, such as buying goods or services, will not be subject to income tax!
When it comes to CGT, the rules are similar to those for other types of assets. Any gains made will be subject to tax at the individual's applicable CGT rate. However, there is an annual tax-free allowance of £6,000 for individuals (reducing to £4,000 from April 2024), which can be used to offset these gains. It's important to note that this allowance is shared with other types of assets, so it's crucial to keep track of all gains and losses.
HMRC requires individuals to keep detailed records of all transactions, including the date, time, and value of each transaction. This can be particularly challenging for those who hold multiple types of cryptoassets and make frequent transactions. However, it's important to maintain accurate records to ensure proper tax compliance.
In addition to CGT, individuals who receive cryptocurrency through mining or airdrops will also be subject to income tax. The value of the assets received will be included in the individual's taxable income and will be subject to income tax at their applicable rate. It's important to note that this also applies to any rewards received from staking or lending cryptoassets.
The value received will be included in the business's taxable income and will be subject to corporation tax. Any gains or losses from buying, selling, or exchanging any form of cryptoassets will also be subject to corporation tax.
It's also worth noting that HMRC has introduced a new manual, which provides guidance on the taxation of cryptoassets in the UK. This manual is regularly updated as HMRC's approach continues to evolve.
Keeping detailed records and understanding the different tax implications for individuals and businesses will help ensure proper tax compliance. By staying informed and up-to-date, you can ensure you always pay the right amount.
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