The official tax agency of the United Kingdom, known as Her Majesty’s Revenue and Customs, has just released a set of guidelines that are meant to guide crypto investors and token holders on how they should pay their taxes and how they should see their digital assets.
According to the report made by the tax agency, cryptos are to be treated more like assets and property than actual money, a vision that clashes with the one from the people who believe in Bitcoin as money.
The report explains that the tax agency and the government of the United Kingdom do not consider “crypto assets” to be money and that the task force that was charged with investigating the case has affirmed that there are three types of tokens. They can either be exchange tokens, utility tokens or security tokens.
Another important information is that the definition of each token for tax purposes relies on the use case of each coin and not on its official nomination. This is a decision that most governments are adopting now since many companies create tokens and market them as utilities when they are, in fact, securities.
For instance, some tokens are purchased specifically because the holders believe that their prices will increase a lot later. These are securities, despite the fact that securities are the type of token that is considerably more regulated than the others, so people often try to market their tokens as utilities instead.
The way and purpose in which the tokens were received or sold also change taxes. For instance, if you received the money as a gift, you do not have to pay the same taxes as when you speculate to make money with them.
It was also reported that the tax agency of the United Kingdom does not consider trading cryptos the same as gambling and the reports detail when the tokens held by U. K. citizens can or cannot be considered securities.
The assets may also be pooled together to pay taxes. This way, it can be easier to calculate losses and gains in order to pay taxes.
Fortunately, the report is very thorough and there is even a sector about hard forks. People from the United States are calling out the country’s IRS to issue a similar guide and it looks like Britain beat them in this case. The section that concerns hard forks deals with how the losses and gains can be determined in a clear manner.
The report ends affirms that there are some cases in which the holder will be exempt from paying taxes like when the tokens are stolen, defrauded or if he loses his private keys. Obviously, in any of these cases, the person would have to prove that the claim is actually true.
According to recent surveys, the United Kingdom has a high interest in crypto assets. Because of this, it is a huge step to launch such a complete set of regulations to help the users in discovering how they will have to pay taxes.