Cryptocurrencies will now have to be identified separately on tax returns, providing greater transparency on who is declaring gains, experts say.
The British finance ministry’s plans to update crypto tax rules should clear up confusion for taxpayers and give the Government more information on crypto holders, experts have said.
As part of the Spring Budget announcement on Wednesday, the Treasury said it was amending the rules surrounding cryptoassets on the Self Assessment (SA) system, which UK taxpayers use to declare their income and gains. This will require taxpayers to report their holdings of cryptocurrencies like Bitcoin and Ethereum separately from other assets.
The new rules are designed to provide clarity for taxpayers and ensure that the Government has access to the same information as other countries when it comes to cryptoassets, a Treasury spokesperson said.
Cryptocurrencies are already subject to taxes in the UK. The most common form of taxation is Capital Gains Tax (CGT) on any profits made from selling tokens. Income from crypto mining and staking is also treated as taxable income, which is reported on the SA form alongside profits made from selling other assets, such as property and shares. This information is sent to the UK tax department, His Majesty’s Revenue and Customs (HMRC).
The Government has announced that it plans to introduce new rules for the reporting of crypto holdings on Self Assessment tax forms for the 2024-2025 tax year. This move is expected to raise an additional £10 million ($12.1 million) a year in tax revenue.
Mike Hodges, partner at the accountancy firm Saffery Champness, said that the move could help remind taxpayers that they need to consider the tax implications of their crypto holdings. He added that this could help to avoid unnecessary taxpayer confusion.