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British Tax Authority Does not see Crypto as Currency.

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In the ongoing drive to find a place for cryptocurrencies in existing legal and regulatory frameworks, the United Kingdom’s tax, payments, and customs authority, Her Majesty’s Revenue and Customs (HMRC), has updated its cryptocurrency taxation guidelines.

Previously, HMRC saw the buying and selling of cryptocurrencies as the same as gambling, and that meant the tax implications garnered from this were tied to Capital Gains Tax. That being said, the active trading of such assets meant that income tax was to be applied first, before capital gains. 

Now, the change in heart from the tax authority sees HMRC stating that it does not consider any of the current cryptocurrencies as either money or currency. Because of this decision, there will be a new approach to taxing these assets, which will differ for individuals and companies.

The new guidelines break down further what taxes apply, and when. For example, individuals who make use of cryptocurrencies can be subject to income tax, and capital gains.

For 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. 

“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. Individuals will be liable to pay Income Tax and National Insurance contributions on crypto assets which they receive from their employer as a form of non-cash payment, mining, transaction confirmation or airdrops.” the guidelines state for individuals.

While these new guidelines seem a lot sterner, and more engaged, it should probably be seen as a good thing as it shows there is an evolution in the mindset of the regulators. HMRC does not see it as simply gambling anymore, and has updated that to now not seeing it as currency, but they are aware that things can change. 

“The crypto assets sector is fast-moving and developing all the time. The terminology, types of coins, tokens and transactions can vary. 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,” the guidelines add.

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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