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Crypto Frontline

The British HMRC Updates Cryptocurrency Taxation Guidelines

The British HMRC Updates Cryptocurrency Taxation Guidelines

The British HMRC Updates Cryptocurrency Taxation Guidelines
November 04
07:46 2019

 

Her Majesty’s Revenue and Customs (HMRC), the UK’s tax, payments, and customs authority, made an important announcement on November 1st when it updated its cryptocurrency taxation guidelines for businesses and individuals.

Just last month we’ve talked about how the US IRS had done something similar, and now the tax agency from the UK had made further clarifications on how both businesses and individuals involved in crypto transactions should pay taxes.

Guidelines clarify important aspects, but not all of them

What we can extract from the guidelines is how the HMRC sees crypto transactions and cryptocurrencies in general. The agency explicitly stated that the current cryptocurrencies existing in the market do not represent a form of currency.

Buying and selling of tokens, cryptocurrency mining, exchange operation, and the usage of cryptocurrencies to buy products or services, are all subject to taxation, based on the information provided by HMRC. Income tax, corporation tax, capital gains tax, stamp taxed and national insurance contributions will apply, depending on each situation.

Changes in stance for crypto trading

If in the past, the HMRC had considered cryptocurrency trading a form of gambling, the latest information suggests the stance had changed in the meantime. What’s also important is that rules for utility and security tokens had not been provided and are due to be added in the future. Stablecoins are another topic that should be clarified, given that the US Congress had recently introduced a bill to regulate them,

The HMRC had requested since August that cryptocurrency exchange platforms operating in the country provide records of customers’ identity and transaction histories. The main goal had been to curb tax evasion using cryptocurrencies, but the agency only requested records from the past two to three years.

It’s still early Monday and the activity in the cryptocurrency market is still very calm. There’s no major news to influence the order flow, which keeps most of the large-cap tokens in very small ranges. We’ve anticipated that a period of consolidation will follow after the major upward move generated by China’s openness to the blockchain technology.

However, the Communist Party is still not willing to give up on national finances and allow citizens to work with cryptocurrencies. The news is pro blockchain and still anti cryptocurrencies, which means there’s no real reason for prices to continue to rise aggressively. Any new and important regulatory measures could have major implications but at this point, governments are not eager to embrace cryptocurrencies as they are today.