If you are familiar with the UK government’s earlier reports on the same topic, it is clear that the state top does not have too much doubts about whether the cryptocurrency should be treated as money or, in their judgment, more realistic-like assets. Apropos of these earlier posts, this week we had the chance to get acquainted with another detailed view of a high-level government organization on the same issue.
HMRC or Her Majesty’s Revenue and Customs is a state agency in the UK, whose primary function is to collect taxes and manage government resources. Likewise, this government’s right-hand deals with various aspects of tax policy in the field, extensive analyzes and the adoption of proposals for the introduction of tax measures.
HMRC is considered crypto the asset, not a form of money
On Wednesday, this UK tax agency released paper that is a comprehensive explanation how the UK government sees the cryptocurrency, and how to implement the correct taxation measures in the future that would cover crypto assets, funds, without specifically emphasizing the issue of tokens’ corporate ownership for business purposes.
The agency does not observe the digital currency in general as a currency but as a property. However, the attitude towards the token is unusual, as it is not classified into certain tax groups according to how it is defined, but depending on in which case it is used. Of course, this document includes exchange tokens such as bitcoin in the tax list, but it is considered that utility and security tokens should be taxed somehow otherwise.
Who should pay a crypto tax, according to HMRC?
According to the HMRC, those who should pay the crypto tax are the first investors who buy tokens in the hope that their price will rise. In successful sales, they should pay the capital gains tax.
Persons who would be paid-off by the employer through crypto, or obtain crypto profit by mining, through a transaction fee or airdrop, should pay income tax, as well as national contributions.
HMRC excludes taxation when buying and selling crypto as well as gambling cases
In further detail, the agency is talking about when and how the British will know which of their assets will be treated with how much taxation. Individuals can put different types of assets into a common “pool” from where their total value will be viewed, not individual losses and gains. This value is compared merely with that value at the end of the tax period.
The next point in the presentation was about hard forks. These phenomena can affect taxation because, during the hard fork application, the chain can be divided into blocks and even to produced new tokens.
The case of lost or damaged tokens is the next item in the HMRC document. This takes into account the case where a token is stolen from an investor or an individual loses down his private keys. In that case, he would have to announce that his crypto property is “worthless” to be allowed to get the disclosure of a loss.