TAX ON CRYPTOASSETS
The taxation on Crypto assets for individuals
Capital Gain tax – Crypto assets are typically held by individuals as a personal investment, usually for capital appreciation or to make purchases. Individuals will be liable for Capital Gains Tax upon disposal of their crypto assets.
Income Tax – Individuals will be liable for income tax and national insurance contributions if they receive crypto assets from: their employer as a form of non-cash payment, mining, transaction confirmation or airdrops.
Individuals who are running businesses that trade crypto assets may have taxable trading profits. This is unlikely to happen often, but in such cases Income Tax rules would take precedence over Capital Gains tax rules.
The taxation on Crypto assets for bussinesses
If a company or business is carrying out activities which involve exchange tokens, they are liable to pay tax on them.
Such activities include buying and selling exchange tokens, exchanging tokens for other assets (including other types of crypto assets), ‘mining’, providing goods or services in return for exchange tokens
The type of tax will depend on who is involved in the business and the activities it carries out (including whether these activities count as a trade).
It is likely they will be liable to pay one or more of the following: Capital Gains Tax , Corporation Tax, Corporation Tax on Chargeable Gains ,Income Tax, National Insurance Contributions, Stamp Taxes, VAT
The amount of tax a business must pay will depend on its income, expenditure, profits, and gains. These must be declared annually to HMRC on either a:
Self-assessment tax return (for individuals)
Company tax return (for companies)
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