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United Kingdom

UK Government Releases Crypto Tax Guidelines

December 20, 2018 by Mark Knowles
The guidelines focus specifically on how individuals who crypto assets might be taxed but does not cover its approach to how tokens held by businesses, or for business purposes, might be taxed.
The guidelines focus specifically on how individuals holding crypto assets might be taxed but does not cover how tokens held by businesses, or for business purposes, might be taxed.

The United Kingdom’s tax agency, Her Majesty’s Revenue and Customs (HMRC), published a comprehensive overview of its approach to the taxation of cryptoassets on its website this Wednesday (Dec 19).

“This paper sets out HMRC’s view – based on the law as it stands at the date of publication – about how individuals who have cryptoassets are taxed,” said a statement introducing the guideline document on the HMRC website.

The guidelines focus specifically on how individuals who hold crypto assets might be taxed but does not cover how tokens held by businesses, or for business purposes, might be taxed.

“It does not explicitly consider the tax treatment of cryptoassets held for the purposes of a business carried on by an individual. HMRC will publish further information about the tax treatment of cryptoasset transactions involving businesses and companies,” continued the statement.

Acknowledging the fast-evolving nature of the cryptoassets sector, the HMRC says it will continue to assess the taxation of cryptoassets on a case-by-case basis.

“The cryptoassets sector is fast-moving and developing all the time. The terminology, types of coins, tokens and transactions can vary. The tax treatment of cryptoassets continues to develop due to the evolving nature of the underlying technology and the areas in which cryptoassets are used. As such, HMRC will look at the facts of each case and apply the relevant tax provisions according to what has actually taken place (rather than by reference to terminology). Our views may evolve further as the sector develops,” continued the statement.

The HMRC statement also makes clear that the tax treatment of all types of tokens is dependent on the nature and use of the token and not the definition of the token.

“This paper considers the taxation of exchange tokens (like bitcoins) and does not specifically consider utility or security tokens. For utility and security tokens this guidance provides our starting principles, but a different tax treatment may need to be adopted,” said the statement.

To read the full text of the HMRC statement click here.

Mark Knowles

Mark Knowles, Coinlaw

With more than a decade of experience as a journalist and editor, Mark has now turned his focus to the blockchain and cryptocurrency revolution that is currently reshaping the global... view profile
Mark Knowles is a member of the Coinlaw team. Read more about our team.

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