The U.K. government has said that individual investors will be liable to pay capital gains tax each time they sell crypto assets such as BTC for profit. In new taxation guidelines published Dec. 19, Her Majesty’s Revenue and Customs (HMRC) also stated that digital assets received from employers in lieu of cash or gained from mining activities and airdrops will be taxed in line with existing income tax and national insurance contribution laws.
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Taxing Crypto-Assets Case by Case
Governments throughout the world are trying to cash in on the thriving blockchain and cryptocurrency industry via a range of individual and corporate tax measures. The latest HMRC taxation framework excludes British digital asset businesses and companies and “does not explicitly consider” those tokens held by individuals for business purposes.
“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,” explained the revenue collector. “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),” it added.
The British tax agency has tended to look at virtual currencies more as property than as currency. It reiterated this position in the new policy document while emphasizing that cryptocurrency trading was not “gambling.”
Capital gains payable on cryptocurrency sales – in this context treated as property – may be between 10 percent and 28 percent depending on the taxpayer’s rate of income. Investors who earn money from mining, transaction fees or airdrops “that are provided in return for or in expectation of a service” will be required to pay income tax
