- HMRC sends letters to crypto investors who have not paid taxes on cryptocurrency
- There, HMRC clarified that all profitable crypto activities are taxable
- Failure to declare and pay these taxes can result in penalties
- The UK is tightening the rules for crypto firms as well
The UK’s HM Revenue & Customs (HMRC) is implementing measures to tax cryptocurrency-related earnings, ensuring that any profitable crypto activities are taxable for all private investors, crypto firms, and their employees.
HMRC Regulation Details
HMRC’s Crypto Tax Compliance Campaign has started sending letters to crypto investors, reminding them to declare and pay tax on any crypto-related activity.
This includes lending, staking, mining cryptocurrencies, and profits from employment or trading crypto assets.
HMRC informed investors that this is mandatory, and otherwise, they could face penalties as well as interest for late tax payments.
Where Is the UK Crypto Tax Policy Headed?
So far, this is the first but massive wave of letters in the broader campaign. The UK’s stance goes beyond taxation, setting new cryptocurrency advertising standards, and registering crypto companies.
More specifically, the Financial Conduct Authority (FCA) has issued new advertising guidelines for crypto firms following a compliance review of financial promotion rules. These guidelines aim to ensure that crypto firms operate transparently and comply with all relevant regulations.
However, many define the FCA’s guidelines as both effective and overly strict, helping the industry meet the UK’s high financial promotion and consumer protection standards but hindering its development.
Conclusion
Any crypto activity is no longer a niche thing for a small group of enthusiasts. We’re seeing multi-billion dollar crypto funds, rapid crypto legalization at the level of entire states, and even direct initiatives and bills to make Bitcoin a reserve asset in the US, which you can read about here.
It is inevitable that taxation will apply to crypto in one form or another as it has become a global phenomenon that is rapidly continuing to evolve.
So, one has to be careful about the obligations this imposes on certain jurisdictions, even if, at the moment, it may seem redundant in one aspect or another to many.
