The UK mandates declaring crypto holdings in tax forms
The UK wants to mandate the declaration of crypto holdings in tax return forms.
The move was announced as part of the UK’s latest annual budget published on March 15 and is expected to raise an additional £10 million for the government.
UK citizens will have to declare their crypto holdings from next year – the tax year ending in April 2025. Under the change, crypto assets must be “separately identified” on the form.
Based on a separate document published by HM Revenue and Customs, crypto holders will have to declare their profits on the capital gains form and will be subject to taxation when investments are sold at a profit.
Holding cryptocurrencies will not incur taxes.
Increasing crypto regulation
Beyond bringing cryptocurrencies into the tax net, the UK is also looking to pave the way for regulation of the crypto industry.
The country’s parliament has been debating legislation surrounding cryptocurrencies and a recent debate on the matter revealed that most members agree to bring more security to the sector by eliminating gaps in regulation via rules.
However, what form these rules may take is still unclear. Chancellor of the Exchequer Jeremy Hunt said at the time that he intends to hold several “round tables” to find the best way forward.
The Ministry of Finance published its first set of draft rules for the crypto industry in February and is currently conducting a public consultation.
Rules for the industry
The new rules cover a number of things within the crypto industry, including onboarding to a trading platform, operating a blockchain node, executing payment transactions or remittances, and mining payments, among others.
Furthermore, the rules also cover stock exchanges and companies offering crypto-related services in the UK. According to the rules, both exchanges and firms offering services in the country will have to secure a license from the Financial Conduct Authority (FCA) to operate in the UK
In addition, firms will have minimum requirements for capital and liquidity and will be subject to requirements to combat money laundering and the financing of terrorism.
The FCA will take the lead in regulating the sector.
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