U.K. releases first detailed tax legislation for private cryptocurrency holders
Following a lengthy consultation period, the British tax collection agency, HM Revenue & Customs (HMRC), released its first detailed tax legislation for private cryptocurrency holders, named “Cryptoassets for Individuals.” The legislation addresses the “likely” tax obligations for private investors who buy, sell, get paid, or even lose cryptocurrency.
According to the legislation, the individuals will be liable to pay either Capital Gains Tax (CGT) or Income Tax (IT), depending on the type of crypto transactions they’re dealing with.
The legislation also addresses employment cases. For instance, if an employed individual is getting paid in cryptocurrency, they would have to pay social security contributions known as National Insurance (NI).
One of the interesting subjects is that in case crypto assets are lost, individual would still be obligated to pay taxes for them, since they are “available to be recovered.” According to the HMRC, all tax obligations remain in force, until it becomes apparent the assets are “forever inaccessible.” However, the paper further contradicts itself by the statement, “Those who do not receive cryptoassets they pay for may not be able to claim a capital loss.”
Following the legislation for individuals, authorities will release the one for businesses, too. According to HMRC, they’re looking “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).” They also add that their views may evolve further as the sector develops.