- HMRC offers crypto investors a tax amnesty.
- The number of years to revisit depends on self-disclosure.
- A recent Treasury Select Committee report on crypto tax was panned.
After a long crypto winter, digital asset prices are rising again. Bitcoin has rallied over 60% in the last three months, and many crypto investors are seeing portfolio gains after years in the red. With talk of a new bull market gathering steam, speculation is building around how high this upturn will go.
In light of the crypto market turnaround, the UK tax authority, HM Revenue and Customs (HMRC), is offering tax relief to cryptocurrency investors. HMRC recently announced an amnesty program for taxpayers to come clean about unpaid taxes on past cryptocurrency profits or transactions.
HMRC Wants Crypto Tax Payments
To encourage Brits to come clean on unpaid crypto taxes, HMRC has offered taxpayers the opportunity to disclose past crypto activity and pay back taxes. Under the amnesty, the number of historical years to revisit depends on the individual self-reporting whether they took reasonable care to file correctly, did not take care, or deliberately filed incorrectly.
Those who took reasonable care to file correctly must calculate and disclose what is owed from the past four years, including the current fiscal period from 6 April 2023 to 5 April 2024. Tax owed, interest, and penalties on the prior three years are payable within 30 days of disclosure submission.
Individuals who did not take care must revisit the last six years, with tax owed plus interest and penalties for the prior five years payable within 30 days of submitting the disclosure. Deliberately filing incorrectly requires reviewing the past 20 years, despite the first crypto transaction occurring approximately 15 years ago.
“Deliberately means that you knew you owed tax but chose not to tell us or that you knew the figures on your tax return were wrong when you submitted it,” stated the HMRC amnesty notice.
While this amnesty allows crypto investors to wipe clean past tax slates, UK lawmakers also aim to advance the British blockchain industry by enhancing how these emerging assets get taxed going forward.
Are the UK’s Crypto Hub Ambitions Busted?
As part of wider plans to transform Britain into a global crypto-asset technology hub, HM Treasury stated that they would explore ways in which the UK tax system could be overhauled to encourage crypto industry development, specifically mentioning a review of how DeFi loans could be taxed more efficiently.
Yet more than a year on from the HM Treasury’s statement, accounting professionals voiced their concerns over a “confusing and contradictory” report by the Treasury Select Committee (TSC) on the matter, particularly a comment by Harriett Baldwin, Chair of the Treasury Committee, who likened crypto trading to gambling.
Nimesh Shah, the CEO of the accountancy firm Blick Rothenberg, stated that “there is uncertainty and lack of publicity around how cryptocurrency should be taxed,” adding that the TSM report failed to instill confidence that lawmakers are capable of making informed decisions about crypto tax treatment.
Winnings from gambling are not a taxable event under UK tax rules.
On the Flipside
- There’s been little movement in “enhanced” UK tax policy around crypto assets.
- Specialized crypto tax software can simplify calculations, especially given the likelihood of multiple transactions over a fiscal period.
- The complexity around cryptocurrency makes formulating a comprehensive tax policy difficult to achieve.
Why This Matters
As crypto adoption in the UK accelerates, clear and proper taxation policy becomes even more important. However, the government has yet to deliver on its promise of enhancing crypto taxes for global competitiveness, sending the message that its crypto hub ambitions are not a top priority.
Learn more about the UK’s drive to embrace stablecoins here:
UK’s Stablecoin Regulatory Regime Proposal Goes Live
Read about the KyberSwap attacker’s latest on-chain message here:
KyberSwap Hacker Doesn’t Mind Hostilities, Unfriendliness