U.K Government Takes Aim at Crypto Assets With New Tax Measures

The U.K government has moved to generate some revenues from the booming cryptocurrency sector. Her Majesty’s Revenue and Customs, has unveiled a new set of tax measures that will govern the burgeoning industry.

HMRC Crypto Taxation

Individual investors will have to pay capital gains tax, each time they sell crypto assets for profit as part of the new measures.  Digital assets received from employers or those gained from mining activities or through airdrops will also be subject to taxation. The new guidelines published on December 19, 2018, will supplement existing income tax laws.

The new crypto assets taxation guidelines exclude British digital asset businesses as well as companies. The guideline also does not affect tokens held by individuals for business purposes.  However, any business that accrues taxable trading profits on carrying financial trades in crypto assets will have to pay taxes as well.

The capital gains payable on cryptocurrency sales will vary between 10% and 28% depending on one’s rate of income.

"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. As such, HMRC will look at the facts of each case and apply the relevant tax provisions according to what has taken place (rather than by reference to terminology)," HMRC in a statement.

Crypto Regulation Disparity

The publishing of the new guidelines underscores how governments around the world are trying to benefit from the thriving industry. Having become clear that cryptocurrencies are here to stay, authorities are increasingly exploring ways to broaden their tax bases.

Unlike other regulators in the world, the British tax agency considers virtual currencies as property rather than currency.  The agency in a new white policy document has reiterated that cryptocurrency trading is legal and not a form of gambling.

Britain moving to tax the cryptocurrency sector comes as a surprise given the stance held across the region. Some regulators in the region maintain cryptocurrencies are risky.  Concerns that cryptocurrencies help fuel money laundering, as well as terrorism, has also seen some regulators institute total bans on them.

Instead of banning cryptocurrencies, U.K’s Financial Conduct Authority has resorted to regulating the sector. For starters, the agency has made it clear that fiat-to-crypto exchanges, as well as custodian wallets, will operate under anti-money laundering regulations. The goal is to ensure consumer protection while also averting the possibility of illicit financial flows.