With the uncertainty that surrounds Brexit and how the U.K.’ future will fold out afterward, people are wondering what will happen with all the policies that were established between the country and the European Union. Despite the uncertainty, the United Kingdom has been actively moving towards a regulatory framework for the crypto sphere in the country.
Although, it seems like the country itself is still trying to figure out how to move forward. Just recently, the UK’s tax, payments, and customs authority, Her Majesty’s Revenue and Customs (HMRC), updated its cryptocurrency taxation guidelines for businesses and individuals. The latest update brings in more clarity in regards to parties involved with cryptocurrencies and how they should be taxed.
The guideline clearly begins by stating that cryptocurrencies are not money or currency. In that regard, it continues by explaining how crypto transactions should be taxed and how the tax returns and accounting practices should be executed. Furthermore, it discusses the taxation of exchange tokens.
The document continues on explaining the different policies that apply to businesses and individuals. As for companies that buy or sell tokens, mine, and/or exchange tokens for other digital assets or for services provided, the taxation policy shall include income tax, corporation tax, capital gains tax, stamp taxes, and National Insurance contributions.
The HMRC continues on explaining how the crypto industry is always changing, which means that the tax authority will always look at the facts of each case separately and apply the regulations that best adapt to the case, rather than just applying a standardized decision.
Another important aspect detailed in the guideline is the fact that the HMRC no longer considers crypto trading as gambling. Additionally, the tax authority will begin requesting records from cryptocurrency exchanges to confirm customers’ identities and transactions history to reduce cases of tax evasion.