• Sat. May 21st, 2022

Are cryptocurrencies taxable in the UK?

ByHazel R. Lang

Mar 23, 2022

Cryptocurrency adoption in the UK has grown at an exponential rate. Citizens are excited about digital assets and happy to trade cryptocurrencies. Currently, cryptos are used for investment purposes and can be used in various retail stores as an alternative payment service. According to a recent report by Chainalysis, crypto transactions in the UK are worth US$170 billion (£123 billion).

Most countries are considering taxing cryptocurrencies rather than banning them. Countries like the United States, Thailand, India, etc., have all introduced different tax brackets on capital gains made on cryptocurrencies.

In the UK, Her Majesty’s Revenue and Customs (HMRC) does not consider crypto assets as money. HMRC decided to group cryptos into four main categories: exchange tokens, utility tokens, security tokens and stablecoins. Exchange Tokens are intended to be used as a form of payment.

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Utility tokens are tokens that provide some value in return. Security tokens are dubbed those that give holders ownership rights and are entitled to a share of future profits. While stablecoins are those whose value is pegged to fiat currencies or other similar assets.

Taxation

UK residents are taxed on gains, just as they are taxed on profits or gains made on stocks or shares. So whenever an individual trades one coin for another or buys property, they trigger an assignment for UK capital gains tax purposes.

Additionally, if an individual receives cryptos either in an airdrop or as a salary, they must pay taxes. Additionally, some of the mining activities, resulting from the cryptos, will be taxed. But, for example, crypto assets are donated to charity, then they will not be taxed, until and unless their value exceeds the cost of acquisition. But, just in case, if someone suffers losses while trading crypto, it becomes a tax liability and will not be considered a capital gain.

Read also : Why is SPELL crypto growing in popularity today?

Conclusion

Cryptocurrencies in the UK are not legal tender, but citizens are required to declare capital gains made through their tax returns. Those who fill out their computer tax sheets themselves can go to various tax calculator websites, such as Koinly, TokenTax, and CoinTracker, which can help investors manage their taxes.

That said, it is also essential to note that cryptos are volatile assets and their prices can change at any time. Therefore, one must be vigilant and do the necessary market research before making any investment decision.

Risk Disclosure: Trading cryptocurrencies involves high risks, including the risk of losing some or all of the amount of your investment, and may not be suitable for all investors. Cryptocurrency prices are extremely volatile and can be affected by external factors such as financial, regulatory or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade financial instruments or cryptocurrencies, you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience and appetite for the risk, and seek professional advice if necessary. Kalkine Media cannot represent and does not warrant that the information/data available here is accurate, reliable, current, complete, or appropriate for your purposes. Kalkine Media declines all responsibility for any loss or damage resulting from your discussions or your reliance on the information shared on this website.


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