CRYPTOCURRENCIES ARE not real money, according to the tax man.
A leaflet spotted by crypto specialists Coindesk explains how the UK’s HMRC is treating crypto for tax purposes, in an attempt to stop people falling foul of regulations and getting stung.
“Cryptocurrency for Individuals” was spotted after a government taskforce was set up earlier in the year to create a series of measures designed to ensure it stays ahead of the befuddling game that is crypto.
The short answer is that crypto is, in the taxman’s eyes, property:
“HMRC does not consider crypto assets to be currency or money. This reflects the position previously set out by the report from the Cryptoasset Taskforce (CATF),”
adding that it also doesn’t see them as exchange tokens, utility tokens or security tokens. Basically, its more like a speedboat than a savings account.
“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,”
What this means is that if you are able to sell them at a profit, you’ll be liable for capital gains tax, as an individual. If you are running a business built around crypto, you will have taxable trading profits. It also adds that speculating on crypto is not considered gambling either.
Thing is, however resourceful they are, it will be quite difficult for the HMRC to trace crypto investments – that’s kind of the point.
Calculating is pretty simple, if you’re the honest type. You just need to compare the total amount you spent on a particular “pot” of cryptocurrency in a tax year, and how much it’s worth at the end. The difference is your profit or loss.
This will come as a relief for anyone who regularly buys piecemeal, because you don’t have to go through every transaction line-by-line.
With cryptocurrencies tanking worldwide (good luck Mr McAfee) there’s also provision for fraud, theft, loss of hardware or the decryption keys, rendering your investment useless.
However, the fact remains that this reads almost like a wishlist, as hiding your Bitcoin (or whatever) is incredibly easy. μ
Source : Inquirer