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As the development of blockchain technology and cryptocurrency around the globe increases, more nations have already started recognizing their use, and shifting and renewing their laws accordingly to suit the new world of digital transactions.
The department of Her Majesty’s Revenue and Customs in the United Kingdom has also made alterations in its policies and recently updated the forms with new information regarding the processing of taxes for cryptocurrency transactions. Previously the tax agency has already released a crypto tax guide.
The document, published on November 1st, detailed that according to United Kingdom’s tax agency, any business or individual using electronic platform to buy or sell exchange tokens, mine or exchange tokens for the purpose of purchasing assets and receiving exchange tokens for providing goods and services will be obliged to pay taxes on the transactions.
Her Majesty’s Revenue and Customs also stated that the amount of tax required to be paid would vary across different businesses involved. In addition, individuals or businesses would be obliged to pay taxes that would be categorized under capital gains tax, corporation tax, contributions to the National Insurance, value-added tax and income tax.
The additions to the Her Majesty’s Revenue and Custom’s documents also include that cryptocurrency of exchange token and digital assets technically cannot be termed as currency or money; they can also not be treated as stocks or marketable securities. Guidelines drafted for the utility or security tokens would be separate from the original document from now on.
The only exception to the taxes on exchange tokens are the token that are issued and obtained under initial coin offerings (ICOs) and other such programs. The transactions from those tokens or their exchange for goods and services will be exempted from taxes.
Crypto Guidelines Liable to Change
HMRC, acknowledging that the crypto sector is moving quickly with new developments taking place every day, also claims that the treatment of crypto assets for tax purposes will continue to develop and alter due to the growing nature of the technology at hand and the fields where crypto assets are used.
Businesses that conduct their exchanges in cryptocurrency and mainly work with it are asked to maintain thorough records of their digital transactions. In addition to which, the amount of money acquired in the form of digital tokens should be stated in its entirety, as suggested by the new document.
The new upgrades to the process come after when previously Her Majesty’s Revenue and Customs had asked digital token exchanges in the United Kingdom to reveal account information and transaction data of the customers.