The crypto world has been going crazy and chaotic recently. Libra is under trial and Bitcoin’s price has not yet stabilized. China is planning its new digital coin CBDC and British Tax Authority Updates Cryptocurrency Guidelines.
Essentially, HRMC is an abbreviation for Her Majesty’s Revenue and Customs, which is a non-ministerial department of the UK Government. It is responsible for the collection of taxes and the administration of other financial regulatory regimes. On November 1, the department has updated its cryptocurrency taxation guidelines for businesses and individuals.
HMRC’s view on cryptocurrency transactions is quite fascinating. The guidelines dictate which taxes apply and explain how to file tax returns and accounting practices. The United Kingdom’s tax authority also considers the taxation of exchange tokens. Besides, in the future, it plans to add security tokens.
HMRC thinks that Crypto is not money or currency
Companies that purchase, exchange, sell tokens for other assets, or provide goods or services in return for tokens will have to pay for one or more different types of tax. Those taxes incorporate corporation tax, stamp taxes, capital gains tax, income tax, and National Insurance contributions.
In August, the company has demanded various crypto traders to provide it with records of customers’ identities and transaction histories. The agency aimed to focus on the existing complication of tax evasion on digital asset trading platforms. HMRC only requested documents from the last two to three years, meaning that early investors in the cryptocurrency space would not be affected.
Also, the tax authority stated that it does not consider any of the current types of digital assets to be money or currency. Besides, the tax authority has also compared crypto trading to gambling. However, HMRC recognized that the cryptocurrency sector develops very fast. Thus, the administration plans to analyze each separate crypto case apply the relevant tax provisions according to what has actually taken place, rather than by relying on theory alone.