British Tax Authority Updates Cryptocurrency Guidelines, Says It Is Not Money
The United Kingdom’s tax, payments and customs authority, Her Majesty’s Revenue and Customs (HMRC), has updated its cryptocurrency taxation guidelines for businesses and individuals.
On Nov. 1, the U.K. government tax agency, which manages taxes alongside other financial policies, released tax guidance updates that further clarify its stance on how businesses and individuals involved with cryptocurrency will be taxed.
Crypto is not money or currency
The guidelines set out HMRC’s view on cryptocurrency transactions, which taxes apply, how to file tax returns and accounting practices, among others. It also considers the taxation of exchange tokens, while stating that rules for utility or security tokens will be added in the future.
Companies that buy or sell tokens, mine, exchange tokens for other assets or provide goods or services in return for tokens are liable to pay for one or more different types of tax. Those taxes include income tax, corporation tax, capital gains tax, stamp taxes and National Insurance contributions.
The tax authority explicitly stated that it does not consider any of the current types of cryptocurrencies to be money or currency.
HMRC further recognized that the cryptocurrency sector is a fast-moving one and it will therefore look at the facts of each case separately and apply the relevant tax provisions according to what has actually taken place, rather than by relying on theory alone.
HMRC had previously considered cryptocurrency trading to be the same as gambling. However, the latest tax guidance update states that the agency does not consider the buying and selling of cryptocurrencies as such.
HMRC requests user data from cryptocurrency exchanges
In August, HMRC requested that cryptocurrency exchanges provide it with records of customers’ identities and transaction histories. The agency aimed to address the perceived problem of tax evasion on digital asset trading platforms. At the time, sources familiar with the matter said that HMRC only requested records from the last two to three years, meaning that early investors in the cryptocurrency space would not be affected.