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HMRC Target UK Cryptocurrency Owners

HMRC has recently issued letters targeting UK residents who hold cryptoassets (such as BitCoin) to consider their capital gains tax (CGT) position.

In the letter, HMRC have advised taxpayers to determine whether they have made a disposal of such assets – in the 2020/21 tax year or earlier – and have set out further points on how taxpayers should then proceed.

Individuals need to calculate their gain or loss when they dispose of their tokens to find out whether they need to pay CGT. Broadly speaking, a disposal of cryptoassets occurs on any of the following:

  • selling tokens for money
  • exchanging tokens for a different type of token
  • using tokens to pay for goods or services
  • giving away tokens to another person (unless it’s a gift to their spouse or civil partner)

A disposal for CGT purposes does not occur where a taxpayer retains beneficial ownership of the tokens throughout the transaction. This most commonly occurs when tokens are transferred between “wallets”.

It is our view that many holders of crypotassets will be unaware of their reporting requirements, particularly in regard to bullet point 2 noted above (token exchange). Clear and concise record keeping will be paramount.

If you require assistance in determining your CGT position or have any queries in relation to cryptoassets, please do not hesitate to contact us.

About the author

Simon is the Tax Director at Ward Williams and has more than 20 years of practical experience working in the tax profession.

 

Specialising in personal tax, Simon qualified as a Tax Technician in 2007, having been awarded with the Ivison medal for attaining the highest mark in the Personal Taxation paper in 2006.

 

As department head, Simon oversees the tax team across the Ward Williams group, whilst managing a diverse portfolio of clients including high net worth individuals, doctors, directors of owner managed businesses, partnerships and sole traders.

simon.boxall@wardwilliams.co.uk

01895 236335