Queen Of UK Rules Out Crypto As Currency: Official

A few weeks following the United States Internal Revenue Service and its publishing of the new guidance for crypto taxation – the United Kingdom’s tax has officially been published by the Queen of UK. Her Majesty’s Revenue and Customs (HMRC) has officially updated the cryptocurrency taxation policy paper for businesses and individuals, the latest cryptocurrency news show.

As we can see the approach by the HMRC in the policy paper is (as expected) very conservative. It stands in line and goes along with other countries and their tax treatments for cryptocurrencies. The HMRC explicitly stated that it does not consider crypto as a currency and the policy paper updated by the Queen of UK mentions the term “crypto assets” and not cryptocurrency.

In more details, we can see that the policy paper on individuals considers crypto activity as a personal investment which is subject to capital gains tax which should be paid when crypto is sold for fiat. These include cases when crypto is used to pay for goods or services, when it is gifted and in many other positions – but not when it is exchanged (crypto for crypto).

The new capital gains tax will follow a quite different legislature in the UK compared to the US and other countries. As the HMRC supervised under the Queen of UK office states, crypto would fall into the definition of a business activity which is done “only in exceptional circumstances.”

“HMRC expects individuals to buy and sell cryptoassests with such frequency, level of organization and sophistication that the activity amounts to a financial trade in itself,” the statement continues.

The policy paper also states that the employee salary and mining activity are subject to income tax. Speaking of, the mining activity by individuals can also be classified as a business activity – and the HMRC will review several factors to decide on the classification (degree of activity, risk, organization and commerciality).

Supervised by the Queen of UK, UK based crypto companies are now subject to corporation tax on their profits and gains. However, if individuals pay income tax on crypto activities, they can also offset their losses from the trades against future profits or other income, the new legislature shows.