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The United Kingdom Published The Taxation Framework for Cryptocurrency Users

The United Kingdom Published The Taxation Framework for Cryptocurrency Users

Throughout 2018, most cryptocurrencies were affected by strong volatility, thus leading to reduced investor interest and lower prices. However, the crypto sector is far from being dead, and governments are well-aware of this aspect.

With this in mind, numerous countries have stepped up their regulatory and taxation frameworks for the digital currency market. Recent reports indicate that following public consultation, the U.K Tax Collection Service published their crypto taxation legislation, applicable to private digital asset holders.


This is a welcomed legislative addition, considering the fact that UK citizens had very little information regarding how they should report their crypto gains. The paper, titled ‘Crypto Assets for Individuals’ contains the main guidelines cryptocurrency users in England need to respect. It is applicable to all private investors who purchase, sell, receive or lose digital currencies.

Briefly, the framework specifies that private investors will need to pay either the Income Tax, or the Capital Gains Tax. This depends on the type of transactions that they engage in. Those who are paid in bitcoin by their employers will also be required to pay their National Insurance tax. According to the UK’s tax department, the HM Revenue & Customs, “The tax treatment of crypto assets continues to develop due to the evolving nature of the underlying technology and the areas in which crypto assets are used.”

Because the cryptocurrency market is actively changing, the taxation framework is not set in stone. As such, if there is any confusion, the HMRC has stated that it will consider each case individually, and determine the applicable guidelines to the individual in question.

The paper also discusses the tax liability for individuals who have lost access to their crypto assets. According to the regulator, individuals remain liable to pay tax on their profits, until the owner proves that the assets are no longer accessible. An interesting addition is that investors who lose out on their crypto assets might be able to forward a negligible value claim, thus exempting them from paying tax on currencies that no longer hold any value.

So far, no statement has been made regarding the applicable guidelines for businesses. It is likely that a new document on this topic will be released in the future.

Following the publishing of the new framework, the UK now represents one of the countries with the most comprehensive taxation guidelines for cryptocurrency users. While non-taxation is certainly the better route, having a clear guideline remains a good option, especially since crypto users throughout the world are dealing with uncertainty when reporting their crypto-based profits. This is relevant in the United States, as the IRS has reportedly failed to release a comprehensive framework that investors can rely on.

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