Posted 2 years ago | by Ben Armstrong

UK Announces Crypto Taxation Guidance; Cryptos like Bitcoin are Not Money

The United Kingdom has issued the cryptocurrency taxation guidance, adding clauses for businesses that work with crypto on Friday last week.

The UK’s tax agency, the HMRC (HM Revenue and Customs) had declared that crypto generally does not consider cryptocurrencies such as bitcoin to be either currency or "stock or marketable securities," which means that cryptocurrencies are basically exempt from most stamp taxes.

The Tax ruling clarifies how capital gains tax, corporate tax, national insurance contributions, income tax, and others. However, tokens used in debit transactions are still subject to stamp taxes, according to the guidance.

The UK Sets Firm Crypto Tax Regulations

As per the latest document, companies will be obliged to declare cryptocurrency-related business actions on their company tax returns, and could be liable to pay the following taxes on their crypto dealings:

  • Capital Gains Tax
  • Corporation Tax
  • Income Tax
  • National Insurance contributions
  • Stamp Taxes
  • VAT

Businesses are required to keep records of cryptocurrency transactions in pounds sterlings and keep records of the valuation methodology for these transactions. Businesses also should record the amount spent on each type of exchange token as cryptocurrency taxation guidance published in Dec 2018, by HMRC

Tokens aren't Shares

In the document, the tax body states that it generally does not consider cryptocurrencies to be currency or “stock or marketable securities.”

The document outlines:

“HMRC does not consider exchange tokens [Bitcoin and major altcoins] to be money. Also, there is typically no counterparty standing behind the token and, as such, it does not seem that the token constitutes a debt. This means that exchange tokens do not create a loan relationship.”

It also adds a term that companies pay staff in cryptocurrencies must do so under “benefits in kind” rulings, which means both Income Tax and National Insurance would be payable in the same way as employees would be paid in British Pounds (GBP).

The tax authority added that yet more rulings would be forthcoming, explaining, “The tax treatment of security tokens and utility tokens will be addressed in future guidance.”

By setting up a solid tax code for tokens, the UK has done a lot to derisk tokens for both businesses and individuals. Murky tax laws can cause problems, and scare people away from the token space. These new regulations may help people to use tokens, and widen their use among businesses.

About Ben Armstrong

ef4f73e9ddeb61becab57469962fa946?s=90&d=blank&r=g United Kingdom Announces Crypto Taxation GuidanceBen Armstrong is a YouTuber, podcaster, crypto enthusiast, & creator of BitBoyCrypto.com. Better known as BitBoy Crypto, he works hard to educate and inform the crypto community.

Ben has been involved with the world of cryptocurrency since 2012 when he first invested in Bitcoin. He used Charlie Shrem's BitInstant & lost Bitcoin in the Mt. Gox hack.

In 2018, Ben decided to go "full-time crypto" and focus all of his time and energy into expanding the reach of crypto.

If you have any questions or comments please feel free to email him at BitBoy@BitBoyCrypto.com or contact him on Twitter @BitBoy_Crypto.