UK investors are being reminded by HM Revenue & Customs (HMRC) to report and pay tax on crypto benefits they may have overlooked.
HMRC Sends Warning Letters to Cryptocurrency Investors
As reported by Cryptonews, investors who may have failed to report or pay taxes on cryptocurrency profits are now receiving letters from the agency. More letters are expected to be sent next month, as this is only the beginning.
It asserted that any funds generated through lending, staking, and mining cryptocurrencies is taxable. Furthermore, earnings from employment paid in cryptocurrency are also subject to taxation. Traders who do not declare previous cryptocurrency earnings could face potential consequences, such as interest on overdue tax payments.
BDO, a tax consultancy, claims that HMRC views the profits or losses from trading cryptocurrencies as liable to Capital Gains Tax (CGT). It further adds, that HMRC rarely recognizes crypto trading as a business activity for tax purposes, meaning that Capital Gains Tax (CGT) usually applies.
Moreover, those who have profited from the sale of cryptocurrency throughout the year might be subject to tax obligations. They should to be ready report any cryptocurrency transactions and potentially file a tax return.
“Many owners of crypto assets may not be fully aware of their obligations and may not have filed a tax return before,” BDO tax partner Paul Falvey stated. “They could well get a shock when this letter hits the doormat – but the worst thing they could do is to ignore it.”
A crypto tax disclosure campaign was launched by HMRC last year. For the first time, the tax authority suggested a specific process that enables individuals to report and correct unpaid taxes.
Among these assets were various types, such as NFTs, utility tokens and exchange tokens.
HMRC and FCA Tighten Crypto Regulations with New Guidelines
When it comes to advertising and registration, the UK has some of the strictest laws governing cryptocurrency businesses.
The Financial Conduct Authority (FCA) published updated promotional guidelines for cryptocurrency companies this week. This came after their adherence to financial promotion laws was assessed.
Furthermore, the regulator listed the positive and bad negative practices that were identified in different companies. These insights have been incorporated into a new manual intended to assist the sector in adhering to regulatory requirements.
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