Cryptocurrency

Tax Deadline Looms for UK Crypto Investors

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The last day for filing tax returns in the UK is January 31st. In case of any UK residing crypto holder, he/she will have to pay either corporation tax, income tax, or capital gains tax. However, most of the crypto assets holders and traders are exempted from the Capital Gains Tax (annual exemption). With this exemption, investors would be able to make benefits of around USD 14,625 from the 2017/18 tax year before any CGT is applicable.

One of the systems the UK uses to collect tax from the country is named as self-assessment. This tax is mostly debited from the people’s wages, savings and pensions directly.  However, in case of people who are earning from other than traditional sources like trading on crypto exchanges, or investing in crypto, would have to report it in the tax filings on their own, they cannot miss this. If they do, they would be charged for tax evasion.

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The Her Majesty’s Revenue and Customs (HMRC) has published a guideline specifically for people holding cryptocurrency assets and the way they are supposed to get taxed. The instruction has mentioned calculations for each transaction to help tax filers understand where their transactions have caused an increase or a loss in their profitability.

In the case of calculating personal taxes, the year is calculated from April 5, 2017, to April 5, 2018. And the taxpayer must mention together all of their chargeable gain incomes and then deduct losses. These losses will be subjective.

In case of those taxpayers who are not eligible for tax exemptions under the Capital Gains Tax (CGT), they will have to pay CGT of 10% or 20%, based on the investor’s category- Is he/she a basic or higher rate taxpayer.

And even if the taxpayer is eligible for CGT, the HRMC will demand taxpayers to submit a tax return (only if the total amount sold was above GBP 45,200). One will have to maintain the records of all the transactions, anyway.

In case the person lost more than he/she gained, this loss will be carried forward to future tax years to settle against chargeable gains.

HMRC states that a tax liability would be applicable to anyone who is involved in crypto assets trading; be it selling them in return of fiat currency, using them to pay for goods and services, or lending them. Crypto for crypto would also be considered here as taxable.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

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