The UK’s His Majesty’s Revenue and Customs (HMRC) has issued ‘nudge letters’ to individuals evading tax on cryptocurrency transactions. HMRC has clarified that income derived from lending, staking, and mining cryptocurrencies is subject to taxation.
Last year, HMRC launched a campaign focused on cryptocurrency taxation. This initiative generated significant public interest, as it marked the first time a tax authority established a dedicated process for cryptocurrency and related tax matters.
Additionally, it underscored the UK’s commitment to rigorously enforcing cryptocurrency regulations.
According to tax consultancy BDO, HMRC regards the buying and selling of cryptocurrencies as subject to Capital Gains Tax (CGT). BDO noted that HMRC rarely recognizes cryptocurrency transactions as taxable events for income tax purposes.
Furthermore, individuals who earned income from selling cryptocurrencies over the past year may be required to pay taxes. Shortly, they will need to report their income and proceed with tax payments.
The UK’s Tax and Customs Authority (HMRC) is actively reminding investors to report and pay taxes on any cryptocurrency profits they may possess.
“Many cryptocurrency holders may not be fully aware of their obligations and may not have filed taxes previously,” said Paul Falvey, a tax partner at BDO. “They might be surprised upon receiving this letter, and the worst thing they can do is ignore it.“
In addition to tax matters and cryptocurrency traders, this week, the Financial Conduct Authority (FCA) also released new advertising guidelines for cryptocurrency companies following an assessment of their compliance with financial advertising regulations. The regulatory body highlighted both effective and ineffective practices observed across various firms.
Related article: How Are Bitcoin Taxed in 2024?
