The British tax authority, known as Her Majesty’s Revenue and Customs (HMRC), has released updated guidance for individuals and businesses who are involved with cryptocurrencies.
Published Nov 1, the HMRC guidelines detailed when crypto holders should pay taxes on their crypto transactions done with exchange tokens (a term the tax authority uses to refer to payment focused cryptocurrencies like Bitcoin).
The agency also defined how individuals and businesses can file taxes and even the best accounting practices. Other sections provided laws for utility and security tokens, which is expected to become more prominent in the future.
Notably, HMRC’s crypto tax guideline has some attributes of a similar regulatory document published by the United States Internal Revenue Service (IRS).
HMRC ruled that non of the current types of crypto assets can be classified as money or currency; thus, transactions conducted with them will not be subject to any specific exemptions accorded to fiat.
Instead, companies that buy, sell, mine, or use exchange tokens to pay for goods and services will be liable to pay one form of tax or the other. The types of taxes that crypto transactions in Great Britain may be subject to includes, national income tax, capital tax, corporate gains tax, national income contributions as well as stamp taxes.
HMRC also expressed knowledge of the fact that the crypto space is still evolving. With that perspective in mind, the tax authority promised to treat each crypto tax case separately, paying attention to what kind of transaction took place instead of relying on mere theory.
Meanwhile, HMRC is not the only tax regulator to release guidance for cryptocurrency-related transactions. In August, New Zealand’s Inland Revenue Departement (IRD) issued new guidance that allowed employers to pay salaries in cryptocurrency, without incurring additional taxes.