News UK Tax Authority Issues Crypto Guidance for Businesses

UK Tax Authority Issues Crypto Guidance for Businesses

-

- Advertisment -

The UK’s tax agency has issued cryptocurrency tax guidance for businesses, following up a year-old promise.

After clarifying the situation last year for individual taxpayers, Her Majesty’s Revenue & Customs (HMRC) issued guidance Friday for businesses and enterprises for crypto asset exchange tokens – such as bitcoin – which it taxonomically separates from utility tokens and security tokens. Guidance on the latter two categories is forthcoming, the regulator said.

Under the latest guidance, crypto assets continue to be defined as commodities, not money or currency.

Token trading

Corporations engaged in trading exchange tokens, including selling goods or services for crypto or mining, are liable for tax payments. The type of tax paid – capital gains tax, corporation tax, income tax, national insurance contributions, stamp taxes or VAT – are at the discrimination of the authority.

Most mining activities constitute a taxable event as a form of trade. If mined coins are not traded they are considered miscellaneous income which carries its own tax burden.

The HMRC says at-home mining is not a taxable event, however.

“Using a home computer while it has spare capacity to mine tokens would not normally amount to a trade … to mine tokens for an expected net profit would probably constitute trading activity.”

Investments and wages

Corporate token holdings are considered taxable events at disposal, incurring both capital gains tax and corporation tax. As with crypto asset guidance for individuals, similar exchange tokens can be pooled for ease of calculation.

HMRC says:

“If a person owns bitcoin, ether and litecoin, they would have three pools and each one would have its own ‘pooled allowable cost’ associated with it. This pooled allowable cost changes as more tokens of that particular type are acquired and disposed of.”

Guidance for hard forks and airdrops is also provided, although there’s no apparent change from the individual guidance issued in 2018.

Additionally, employees can be paid in crypto assets under the new tax laws, regardless of the authorities non-recognition of crypto assets as money. However, employers cannot use crypto assets for pension funds since HMRC does not view crypto assets as money or currency, but as a commodity.

Recognizing the fast-paced and dynamic nature of the crypto market, room for specific interpretation is allowed for in the new framework.

“HMRC’s views may evolve further as the sector develops,” the guidance states.

Tax forms and U.K. pounds image via Shutterstock

Source

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest news

Network Security Using Cryptography: Everything you need to know

This article will describe what is Network Security Using Cryptography and everything you need to know before...

Mercuriex Cryptocurrency Exchange Launches New Utility Token, SURF

MercuriEx Cryptocurrency Exchange, originally developed in 2017, came under new ownership in December 2019. Since taking over the exchange,...

Fungibility: Bitcoin Mixers Favorite Term That No One Understands

Fungibility, perhaps the most important concept when dealing with a decentralized and anonymous currency, but does bitcoin...

Crypto can’t thrive in the real world – but stablecoins can

We can safely say that the hype about cryptocurrencies is pretty much over. The claims of Bitcoin...
- Advertisement -UK Tax Authority Issues Crypto Guidance for Businesses

How to double your crypto

Most of us have a small gambler deep inside our souls. We love to feel the thrill...

Cryptocurrency Top Security Risk Concerns: What You Can Do to Protect Your Crypto

A report by CipherTrace revealed that in the first half of 2019, criminals and fraudsters stole more...

Must read

Mercuriex Cryptocurrency Exchange Launches New Utility Token, SURF

MercuriEx Cryptocurrency Exchange, originally developed in 2017, came...
- Advertisement -UK Tax Authority Issues Crypto Guidance for BusinessesUK Tax Authority Issues Crypto Guidance for Businesses

You might also likeRELATED
Recommended to you