There will always be schemes and loopholes , and it’s a constant battle between tax advisers and HMRC, generally only the wealthy profit !
My point is that the HMRC can make up a new tax law to specifically target cryptocurrency . Hopefully they won’t as is such a small industry, but who knows in the future ...
Topic: UK - latest HMRC guidance on Cryptocurrency (Read 171 times)
Unfortunately the HMRC can and do change the rules. The interpretation of the tax laws can be challenged and changed and it happens. There are many examples of this - just google it.
If the HMRC says you pay 20% on your capital gain, you do your sums and hand over 20% of your gain. That's completely unambiguous.
If some dick chooses to sell a scheme based on their own ludicrous interpretation of a wording that's a different matter. If people want to push the envelope then they shouldn't start crying if the tax man pushes back.
Unfortunately the HMRC can and do change the rules. The interpretation of the tax laws can be challenged and changed and it happens. There are many examples of this - just google it.
Admittedly- many loopholes are found and used as a scheme - a recent loan scheme -
https://www.tax.org.uk/media-centre/blog/technical/loan-charge-explainer
- definitely a loophole , but the important thing to take away from this example is the HMRC has gone back 20 YEARS and has the power to do so !
Cryptocurrency is classed as an asset at the moment , the HMRC have the power if they decided to , to change this definition , give it a different tax name and decide to tax it at 50 % with no losses taken into account.
The HMRC can pretty much do want they want !
Us taxpayers can only follow the law as it is and should do , BUT , if the government is running low on money, laws can be changed !
Admittedly- many loopholes are found and used as a scheme - a recent loan scheme -
https://www.tax.org.uk/media-centre/blog/technical/loan-charge-explainer
- definitely a loophole , but the important thing to take away from this example is the HMRC has gone back 20 YEARS and has the power to do so !
Cryptocurrency is classed as an asset at the moment , the HMRC have the power if they decided to , to change this definition , give it a different tax name and decide to tax it at 50 % with no losses taken into account.
The HMRC can pretty much do want they want !
Us taxpayers can only follow the law as it is and should do , BUT , if the government is running low on money, laws can be changed !
The problem with us in the UK, is that the HMRC could change their stance or ruling at any time in the future and then retrospectively come after you for tax money in many years to come !!!
Can you point to a single case of that anywhere?
If that was the case if the government was running low on money they could simply add 20% to your income tax in 2002.
They'd get their heads kicked in.
Once it's paid under the rules that exist on that day it stays paid. A bit different if you're using some ludicrous avoidance that gets picked apart scheme of course.
They can't retroactively change the rules and then try go after you for them. They might change how they tax cryptos in the future but that's irrelevant to how you pay your taxes right now. As long as you've been following the rules/guidelines now then you won't have a problem, just make sure you stay on top of the changes and make sure to check every year before you do or pay your taxes so there's no issues.
The publication says,
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos! In my country, bank accounts are getting freezed for dealing in cryptos!
Quote
This paper sets out HMRC’s view - based on the law as it stands at the date of publication – about how individuals who have cryptoassets are taxed. It does not explicitly consider the tax treatment of cryptoassets held for the purposes of a business carried on by an individual.
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos! In my country, bank accounts are getting freezed for dealing in cryptos!
I can feel your pain in there sir! Indeed, it is quite hard to be dealing with something that is not recognized by the government even in a seemingly vague way. With the taxation in law, we are always assuming that the government is somehow recognizing the legality of something where the tax is imposed on. I am sure that in countries where recognition of cryptoassets is not yet a reality, time will come when that can happen too. Just be patient and be always creative while dealing with cryptocurrency.
They don't need to provide specific guidance, but just use logic. If you're earning coins then the value should be noted at the point you received them and make sure you keep a good record of this and then there should be nothing to worry about. Capital gains would likely need to be paid if you hold coins for an amount of time and sell them for profit. If you've kept a record of how much the coins were worth when you received them then it's easy to work out the gains.
The publication says,
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos! In my country, bank accounts are getting freezed for dealing in cryptos!
Quote
This paper sets out HMRC’s view - based on the law as it stands at the date of publication – about how individuals who have cryptoassets are taxed. It does not explicitly consider the tax treatment of cryptoassets held for the purposes of a business carried on by an individual.
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos! In my country, bank accounts are getting freezed for dealing in cryptos!
I can feel your pain in there sir! Indeed, it is quite hard to be dealing with something that is not recognized by the government even in a seemingly vague way. With the taxation in law, we are always assuming that the government is somehow recognizing the legality of something where the tax is imposed on. I am sure that in countries where recognition of cryptoassets is not yet a reality, time will come when that can happen too. Just be patient and be always creative while dealing with cryptocurrency.
The problem with us in the UK, is that the HMRC could change their stance or ruling at any time in the future and then retrospectively come after you for tax money in many years to come !!!
@avikz , I do feel for you - crazy, but at least we are allowed to hold/trade etc in crypto .
In any country, there are advantages as well as disadvantages that cryptocurrency holders, users and traders are facing and we can't do anything but deal with them for now. Well, as citizens, we can voice out our concerns so the government can also hear what the people in this industry can be saying but for now following the existing law is the best thing to do. With the law established in taxation comes the recognition of the industry so that we are now anymore considered to be in an illegal business and that counts a lot.
The problem with us in the UK, is that the HMRC could change their stance or ruling at any time in the future and then retrospectively come after you for tax money in many years to come !!!
Can you point to a single case of that anywhere?
If that was the case if the government was running low on money they could simply add 20% to your income tax in 2002.
They'd get their heads kicked in.
Once it's paid under the rules that exist on that day it stays paid. A bit different if you're using some ludicrous avoidance that gets picked apart scheme of course.
The publication says,
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos!
In my country, bank accounts are getting freezed for dealing in cryptos!
Quote
This paper sets out HMRC’s view - based on the law as it stands at the date of publication – about how individuals who have cryptoassets are taxed. It does not explicitly consider the tax treatment of cryptoassets held for the purposes of a business carried on by an individual.
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos!
In my country, bank accounts are getting freezed for dealing in cryptos!
Thats one unique advantage citizens that live in a developed and a more exposed economy tend to enjoy while the government in other countries especially the fairly backward ones sees their citizens as moving too fast than the country in terms of technological advancement and the only thing they see is a threat and nothing else. Every options they can see is how the technology can be potentially used to cause serious harm and nothing the inherent advantages that it possesses.
A framework like this is just a step in the right direction because whatever happens after will be based on that framework as every policies, laws, regulations, decisions will be based on achieving the objectives set in the framework.
The problem with us in the UK, is that the HMRC could change their stance or ruling at any time in the future and then retrospectively come after you for tax money in many years to come !!!
@avikz , I do feel for you - crazy, but at least we are allowed to hold/trade etc in crypto .
The publication says,
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos!
In my country, bank accounts are getting freezed for dealing in cryptos!
Quote
This paper sets out HMRC’s view - based on the law as it stands at the date of publication – about how individuals who have cryptoassets are taxed. It does not explicitly consider the tax treatment of cryptoassets held for the purposes of a business carried on by an individual.
You need to understand how lucky you guys are! You already have a legal framework where crypto is legally recognized. Also you have a tax law around this. Finally now you have a guidance publication to support the individuals who deal in cryptos!
In my country, bank accounts are getting freezed for dealing in cryptos!
Just as the subject header says - latest guidance from HMRC - dated 20/12/19
https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals
Point to remember - these are guidance notes only , and knowing UK tax laws likely to change at a whim !
https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals
Point to remember - these are guidance notes only , and knowing UK tax laws likely to change at a whim !
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