HM Revenue & Customs (HMRC) are sending out “One to Many” letters (where a standard message is sent to many customers) to taxpayers who they believe have disposed of cryptoassets, but have not declared any resulting chargeable gains or income.
The letter provides clarification on what constitutes a cryptoasset disposal:
- Selling cryptoassets for fiat currency (pounds or dollars);
- Exchanging one cryptoasset for another;
- Using cryptoassets to buy goods or services; and
- Giving away cryptoassets to someone who is not your spouse or civil partner.
Tax due on cryptoassets
Cryptoassets can be a complex area of tax, and the communication from HMRC reminds taxpayers to go to GOV.UK to check if tax is payable, refer to their Cryptoassets Manual or seek professional guidance.
- Disposal of cryptoassets: Capital Gains Tax (CGT) may be payable on any gains that are made;
- Generating an income from cryptoassets: Income Tax and National Insurance contributions may be due. This also applies to any employment which resulted in an income paid in the form of cryptoassets.
Next steps
HMRC are urging taxpayers to get in touch with them if they have capital gains or income relating to cryptoassets that they have not advised them of or included in their Self Assessment or Capital Gains Real Time transaction returns.
Even if taxpayers are satisfied they don’t have any cryptoasset-related tax due, they should still contact HMRC, detailing why they do not have tax to pay and providing supporting information.
A copy of the HMRC One to Many letter on cryptoassets can be found here.
How M+A Partners can help
Understanding your financial position and tax requirements is important when dealing with cryptoassets. Our team is here to help determine the correct tax treatment of any transactions involving cryptoassets, including calculating taxable gains or losses on cryptoassets. We will ensure any gains or losses are correctly recorded and any reliefs that can be claimed are applied.
For any help or guidance please get in touch with your usual M+A Partners contact or email enquiries@mapartners.co.uk.
