UK to officially add a crypto tax reporting section to its 2024-25 tax forms

Get all important market news and expert opinions in one place with our daily newsletter. Receive a comprehensive summary of today’s top stories straight to your inbox. Sign up here!

(Kitco News) – While governments around the world have had no problem attacking the cryptocurrency market, calling it the realm of thieves and criminals and doing everything they can to cut it off from the banking system, they have also shown no qualms about taxing crypto profits as well , leading some to question what all the protests are really about.

The UK has become the latest country to strengthen its crypto taxation regime with the addition of a new separate category for crypto assets on tax returns, which will appear on the 2024-2025 tax form.

On Wednesday, the UK Treasury published a policy report outlining the national budget for 2023, which included a change to the self-assessment forms for crypto assets.

The report includes a table outlining the expected expenditure and revenue of the national budget, and the crypto asset line shows expected revenue in 2025-26. This indicates that UK citizens will be required to declare all gains or losses from crypto assets from the previous tax year, which is 2024-25.

This will be the first time UK taxpayers will be required to separate their profits from crypto from other income when filing their tax returns, the government said.

Under a section of the report titled “Cost of Living and Public Services”, the Treasury included a section on “Changes to the Self-Assessment Forms for Crypto Assets” which states: “The Government is introducing changes to the tax return forms for tax returns that require amounts in respect of crypto assets to be separately identified. The changes will be entered on the forms for the tax year 2024-25.”

Unlike the US, the majority of UK taxpayers do not file a tax return as the government removes any tax owed directly from their wages. The main groups affected by this change are higher earners, the self-employed, individuals who need to declare investment income and those with complex tax situations.

The UK government estimates that this change in crypto reporting will bring in £10 million ($12 million) a year from the 2025-26 financial year.

The Chartered Institute of Taxation (CIOT), a leading professional body that analyzes national tax policy, issued a statement on Tuesday welcoming the new changes but saying there is still more work to be done.

“Highlighting the need to declare crypto-asset transactions in the tax return will help raise awareness of people’s obligations in this area,” wrote Gary Ashford, vice president of the CIOT. “But much more needs to be done to counter widespread ignorance of tax payment and reporting requirements for crypto.”

The biggest concern highlighted by Ashford is the need to educate the public about capital gains tax (CGT) rules, as it is estimated that less than a third of low-income taxpayers have a proper understanding of CGT.

“By April 2024, the annual exemption for CGT will have been reduced to £3,000 (£1,500 for trustees), so there is a likelihood that up to 300,000 additional individuals could be subject to CGT due to this reduction,” Ashford said. “By having crypto assets clearly identifiable on the CGT pages of the tax return, this will hopefully tell investors that these investments are also subject to reporting.”