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HMRC recently published a paper setting out their view of the appropriate tax treatment of cryptoassets (or cryptocurrencies as they are also known). Here is the link but I’ve also summarised in this article the key points to note.
It’s always been HMRC’s view that the buying and selling of cryptoassets by an individual normally amounts to an investment activity and profits would be liable to capital gains tax. HMRC will only accept an individual is trading in cryptoassets in exceptional circumstances and will consider frequency of trade, level of organisation and sophistication in concluding whether a trade is being continued. That view has not changed, but given cryptoassets are becoming more prevalent, HMRC have published this paper in order to provide greater clarity and understanding.
- HMRC does not consider cryptoassets to be currency or money hence the use of the term cryptoasset, as opposed to cryptocurrency.
- Cryptoassets received as employment income count as money’s worth and as such, are subject to Income Tax and NIC.
- A disposal of a cryptoasset includes the following:
- A sale for money
- An exchange for different cryptoassets i.e. Bitcoins exchanged for Ripples
- Buying goods or services using cryptoassets
- Outright gifts
Contact our specialist team
- Vakis Kilikitas – Senior Tax Adviser
- Tel +44 (0)20 7832 0444
Senior Tax Adviser
Vakis is both a CGMA qualified accountant and a qualified chartered tax adviser. This provides him with a deeper understanding of key issues faced by businesses, enabling him to take a more commercial approach when advising clients.
Vakis has a strong background of working with high net worth individuals, high profile sports personalities, clients with property interests and owner managed businesses. He has significant experience in assisting early-stage companies with the Enterprise Investment Scheme and implementing share option schemes.
His areas of expertise also include corporate reconstructions, handling HMRC enquiries, and more specialist Code of Practice 8 investigations.