According to a news letter from tax advisor Hillier Hopkins, HMRC (Her Majesty’s Revenue and Customs) is preparing to increase capital gains taxes in line with income tax rates.
Bitcoin, and cryptocurrencies in general have drawn in many investors over the years, but the recent bull market for cryptocurrencies has started to reach the eyes and ears of the average retail investor, who is eager to make some gains during these most difficult of economic times.
With the Bitcoin price surging to over $58,000 just recently, many eyes have been drawn to the wildly successful cryptocurrency. Among these eyes are those of government agencies who are keen to cash in on this success.
Such a boom in an asset class, when all others appear to be failing, is very likely to make it a target for raising extra taxes. The Principal of Hillier Hopkins remarked:
“HMRC sees cryptocurrencies not as a currency but as investment assets and as such are subject to capital gain tax. The huge increases in Bitcoin in recent weeks will see HMRC take a keen interest where investors choose to cash-in on that growth.”
The Principal goes on to talk about how cryptocurrencies are mistakenly seen as hidden transactions, but the fact that they are being carried out online, on various blockchains, means that they can almost certainly be tracked.
Coinbase is often a starting place for new cryptocurrency investors, and not many will know that the platform has been sharing all the UK investor transactions of more than £5000 with HMRC. Based on the information given by the US-based platform, HMRC has already started writing to investors with a view to recouping the tax on these larger transactions.
With the UK budget looming on the horizon (March 3), it is expected that capital gain taxes will be raised, so paying the taxes now at 20%, would be vastly more preferential than if they were raised to 40% at the higher income tax rate.
Based on this information, such good times might well be about to come to an end, and it would seem incumbent on investors to start seriously looking at their crypto asset gains before HMRC does it for them.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.