Commenting on crypto tax, UK Conservative MP Matt Hancock said that the country needs to be more liberal in its approach to regulation. He argued it should introduce an “attractive” regime so it can maintain its position as the cryptocurrency hub of Europe. 
“The tax and regulatory regime needed to be dealt with quickly”, Hancock stated.

His words were heard by the ex-Chancellor Philip Hammond who said England is slowly trotting after its competitors regarding the regulation of digital assets since some countries, such as Korea, already decided on a [crypto tax](/news/article/south-korea-crypto) that would be optimal for consumers.
He stated the UK must activate itself quickly since, for now, it doesn’t look like it will maintain its position as a global cryptocurrency center.
 “It isn't too late for us to catch up and recover, but we are getting very close to the point where it will be too late,” he said and added development around legislation of the whole digital asset industry moves pretty slowly. 

Hammond stated that the FCA should have been faster in employing the industry experts. “We need the industry, to provide us with the talent to work up the regimes we need to introduce,” he said.


## Crypto tax, UK free zone

Still, there are more possibilities and reasons why we think the UK could become the real global hub when it comes to cryptocurrencies. Let's look at the advantages of being headquartered in the UK Channel Islands. The [Isle of Man](https://www.digitalisleofman.com/sectors/blockchain/) gives investors a pretty good opportunity for their crypto-based, with 0% standard rate of corporate tax, no capital gains tax and personal tax rates that are among the lowest in Europe.

The self-governing British Crown dependency has been a famous IT and financial hub for years and with it being more welcoming towards the cryptocurrency industry – UK Channel Islands seem like an attractive home to the crypto participants.

Also, according to a new PwC Channel Islands report, one in five British citizens already own cryptocurrency. With that in mind and Tether recently [launching a stablecoin pegged to the British pound](/news/article/best-crypto-exchange-uk)  - these are supportive signs that the UK that bodes well for the future prospects of the UK being a crypto hub.



Crypto tax UK situation may propel the country into crypto haven

South Korea crypto tax, which was meant to become effective for the 2022 fiscal year, but was [delayed to 2023](https://cointelegraph.com/news/why-nft-adoption-is-so-high-in-south-korea), has again been halted, this time by the president himself. 

South Korea’s newly elected president Yoon Suk-yeol said he would back up the decision on deferring taxation on digital investment gains until the government enacts a new set of regulations called the Digital Asset Basic Act (DABA). 

DABA was created by the Financial Services Commission (FSC) earlier this year and consists of numerous legislations introduced for consumer protection.

DABA applies to the token distribution, nonfungible tokens (NFTs), centralised exchange (CEX) listings, and international finance as a whole. It also acts as a response to U.S. President Joe Biden’s executive order on digital assets.

## Postponed Until 2025

Be it as it may, a 20% tax on cryptocurrency profit, previously scheduled for January 1, 2023, is now postponed to 2025. 

An FSC representative commented that “taxation of investment income from virtual assets should be done after investor protections are in place.”

Suk-yeol asserted it would be frivolous to enforce taxation without a clear legal definition of [cryptocurrencies](/news/category/crypto-coin-news)’ status within the country’s financial system. 

“As such, it would be better to postpone the tax until the crypto market had matured and new legislation was readied thoroughly to ensure transparency and investor protection,” he said.

The yet-to-be-confirmed nominee for deputy prime minister and finance minister, Choo Kyung-ho, added taxing crypto in 2025 seems like a much more acceptable solution.

Last year, South Korea warned that defining crypto taxation laws was imminent and the country’s finance minister Hong Nam-ki then said the government plans to impose taxes on gains from the trading of virtual assets.

The thing is, for now, crypto taxation in South Korea seems to be stuck into a so-called grey legislation area: since cryptocurrencies aren’t considered currency or financial assets. For now, cryptocurrency transactions are tax-free. 


South Korea crypto tax halted to protect consumers

## What is tax?

To have a clear insight into what this article is about, you first have to understand the meaning of tax. 
Tax is a mandatory contribution imposed on individuals or corporations by a government entity, and these contributions are used to finance government activities.
The government does not regulate the crypto space in the UK, so how is a crypto investor obliged to pay taxes? This is a common question on the internet. 

Crypto is generally not considered by the government as a form of money. Cryptocurrency is, in fact, a digital currency that came to light around 2008/2009. There was little or no regard for it then, as people considered it as an avenue for internet crimes. Currently, the crypto market has been known to generate millions of pounds and is sure to create awareness. Bitcoin is the cryptocurrency that made the crypto space as famous as it is now. Bitcoin is the largest cryptocurrency, with a price of about $30,000.

## Do you pay tax on crypto gains in the UK?

The answer to this question is yes, but it depends on how the crypto assets are used. The regulations guiding the crypto space are still firm as cryptocurrency is not a generally accepted form of money, but that doesn’t stop a crypto investor from paying taxes in the UK. 

According to the UK tax law, you are eligible to pay tax as long as you earn up to £12,300. However, transactions done in the crypto space are mostly untraceable, so how can the government tell If your profit is up to £12,300. 

Without the crypto space being regulated, as long as you make up to the approved amount for paying tax, you are liable to pay capital gains tax, but without any close monitoring from a government body, most people flaunt this tax law. 

By law, as long as you fall into any of these categories, you are liable to pay crypto tax gains.

•	If your employer pays your salary with cryptocurrency: Though transactions done with cryptocurrency cannot be traced, as long as the company you work for is registered, you must record payments made to you. This makes it easier for the government to be aware of your cryptocurrency activity. 
•	If your business is backed by cryptocurrency: This also applies to cryptocurrency companies based in the UK. If your registered business is connected to cryptocurrency, you are liable to pay tax. 
•	If you mine crypto: crypto mining, especially Bitcoin, requires a high energy level. If you are a crypto miner, you are eligible to pay tax.
•	If you trade crypto: if you trade crypto in the UK and make good profits, you should pay tax.

Some companies or individuals backed by cryptocurrency often hide under the fact that the crypto space isn’t regulated, but the thing is, the law always finds its way around things, and they are also likely to fall out of luck in the future. 

## The question is, Do you pay tax on crypto gains UK?

It is a well-expected question considering the unregulated nature of crypto and the fact that most people see crypto investment as gambling since it is an unpredictable space. However, unlike what some individuals or corporations may assume, [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) does not classify cryptocurrency as gambling. Therefore, as long as there is profit, paying tax is required. 

## What Are the tax rates?

Tax rates depend on the type of assets and are not permanent. The rates can change each year, so to avoid defaulting in any way, monitor the rates at all times. 

•	For shares, you are required to pay a basic rate of 10%
•	Residential properties require a basic rate of 18%
•	Cryptocurrency requires a basic rate of 10%

## Conclusion 

Paying tax to the government if you make a profit is highly mandatory. So whether the crypto space is regulated or not, taxes must be paid. Though the crypto space is volatile and maybe seem like gambling, it does not exempt a crypto trader from paying taxes in the UK. 




Do you pay tax on crypto gains in the UK?

Taxes are an important part of realising profit while trading cryptocurrencies and considering your British [Bitcoin](/coins/btc) profit. It is crucial to be on the right side of the law and pay what you owe to the government.

The UK does not have a specific tax for bitcoin or cryptocurrencies; instead, it falls into the categories of Capital Gains Tax and Income Tax. We will explain the main differences between the two to help you understand into which of the two you fall.

Capital Gains Tax is implemented when doing the following with cryptocurrencies; selling crypto, trading crypto, spending crypto, and/or gifting crypto. You don't pay tax on all proceeds, or if one of these actions results in a loss, you only have to pay on crypto gains or, in other words, when you've made a profit.

You don't pay tax if you gift crypto to a spouse or civil partner.

It would be best to consider what tax bracket you fall into when calculating your gains. Unlike other countries, the UK taxes all capital gains and is taxed under the same rates and based on how much you earn annually. 

## The following are from the 2020-2021 tax year:

•	if the amount earned is more than £50,279, you are charged 20%

•	if the amount earned is below £50,270, you pay 10%

It's worth noting that if your crypto gains are less than £12,300 for the year, you do not need to pay any tax.
To calculate Capital Gains Tax, you need to work out your cost basis. To do this, you need to find out the Great British pound (GBP) price at which you bought plus any transaction fees. Once you have this figure, it is pretty straightforward. Capital gain is the difference between the price at which you purchased and the price at which you disposed of the asset. For example, if you buy Bitcoin worth £3,000 at the time of purchase and decide to sell it a month later for £3,300, your capital gain would be £300. It is important to keep track of your losses too, as recording them with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) can offset against your gains, reducing the total amount you owe in taxes.

### The following actions are excluded from paying tax in the UK:

•	buying crypto with GBP

•	holding crypto

•	transferring between wallets

•	donating crypto to charity

Lost crypto is also not considered to be disposed of. For example, if you lose your private key and prove that you cannot regain access, you can submit a negligible value claim. If your application is successful, you may be able to claim that as a capital loss, reducing your taxes.

So, we've discussed Capital Gains Tax, but what is Income Tax? Crypto is taxed as income when a person gets paid in crypto, acquires staking rewards, mines tokens, or receives airdrops. HMRC has yet to decide what decentralized finance (DeFi) protocols are considered income. Examples of unclear but most likely income-taxed protocols include; referral rewards, learn to earn, watch to earn, play to earn, and shop to earn.

### Lastly, let's look at the Income Tax brackets for crypto:

•	up to £12,570 = 0% tax

•	£12,571 - £50,270 = 20%

•	£50,271 - £150,00 = 40%

•	any amount over £150,000 = 45%

Hopefully, this maximizes your British bitcoin profit!


British Bitcoin Profit: Paying Your Taxes

In recent years, cryptocurrency assets have grown in popularity in the tax world and piqued the interest of investors and industry regulators, but what exactly are the crypto tax UK rules?

As the industry around cryptocurrency rapidly evolves, the tax situation has become more complicated. The emergence of distinct and complex cryptocurrency platforms, such as gaming and gambling platforms, and the evolution of non-fungible tokens and hybrid tokens for specific purposes have altered the asset class.

There may be the opportunity to take advantage of more favorable tax rules if you are not resident or domiciled in the UK for tax purposes.
What are the regulations on paying taxes on the crypto asset?

Cryptocurrency (or crypto assets) are electronic currencies that can be transferred, stored, and traded. Ideally, it is almost impossible to counterfeit or double-spend on cryptocurrencies. This is due to their technologically advanced nature, secured by cryptography. Furthermore, the emergence of new technologies has enabled the creation of crypto assets in various forms.

Who is responsible for paying taxes on crypto assets? The short answer is that anyone who lives in the UK and owns crypto assets may be subject to taxation. Current regulations deem you liable to pay tax when you trade, mine, receive as payment, receive as an airdrop in place of a service (or expected service), or exchange for any crypto asset.

Let's take a look at the various taxes you may be required to pay when trading, disposing of, or exchanging any crypto assets:

## Income Tax

Occupation is a factor when [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) decides how to tax crypto assets. For example, if the holder happens to be a trader, their trading profits will be subject to Income Tax. If the activity is considered professional trading, Income Tax takes precedence over Capital Gains Tax and applies to general profits and losses.

## Capital Gains Tax

Whether you traded, sold, or exchanged any crypto assets, you will almost certainly be required to pay Capital Gains Tax (CGT). You may also be subject to CGT if you use your cryptocurrency to pay for services or goods. Cryptoassets will be taxed at the Capital Gains rate of 20% for those classified as higher or additional rate taxpayers. On the other hand, basic rate taxpayers will be taxed differently, and the rate charged will be determined by one's taxable income.

## Inheritance Tax

Inheritance Tax may be due upon death when dealing with crypto assets. Therefore, Inheritance Tax planning should be considered.

In conclusion, crypto assets are a prime example of how much the tax world has evolved and how new technologies influence day-to-day industry operations. Therefore, as a trader, investor, or industry regulator, you must understand what crypto assets are and the implications of their use.

Cryptoassets are a valuable new type of investment vehicle, and the UK Government has a vested interest in taxing crypto trading profits. Unfortunately, because the technology is still relatively new, HMRC has not had sufficient time to catch up fully. As a result, there are several loopholes and blind spots in UK tax law that make it unclear how certain crypto assets should be treated. If you trade crypto, you would be well advised to consult a tax professional.

For more Business & Markets news, see [here](/news/category/crypto-business-news).


Crypto Tax UK: A Comprehensive Guide

[Coinbase](https://www.coinbase.com/) Twitter tweeted a link to the article titled “The crypto guide to taxes” in the last days of March 2022. 

The tweet came a few weeks to tax season 2022 in the United States of America, and with the deadline for submitting personal gains to the Internal Revenue Service (IRS) fast approaching.

Coinbase tweets towards the end of March were on blockchain analytics, promotions for new accounts, and advanced trading on the cryptocurrency exchange. 

For Coinbase Twitter news to focus on crypto taxes means representatives of the platform continue to get messages from account holders on what activities constitute paying cryptocurrency taxes.

## Coinbase Twitter Reminder

Coinbase users have a cause to worry about Coinbase taxes. This is the primary reason why it is not surprising to find millions of verified Coinbase users asking the question of which crypto transactions are taxable? 

According to Coinbase, numerous kinds of crypto transactions are considered taxable events. Several crypto activities are taxable, but some of them are not. 

When you sell and convert crypto, you should know that you must pay crypto capital gains tax.

With that said, activities such as mining and holding digital collectibles in the form of non-fungible tokens (NFTs) and buying and holding crypto are non-taxable events.

Therefore, if you know that you have staked, spent, converted, sold, and earned crypto, you should prepare to pay taxes on cryptocurrency gains.
Taxes on personal income come in different rates and brackets, and the cryptocurrency tax is the same. Cryptocurrency tax rates fall under ordinary income or capital gains.

The rate of token tax depends on factors such as the method of obtaining the crypto and the duration you held onto the digital coins. 
IRS crypto taxes is similar to paying taxes on stocks. Therefore, you will pay relatively lower rates if you decide to HODL (hold onto your tokens for at least one year before selling them). 

You will pay taxes on crypto if you are involved in swapping tokens. A great example is trading crypto pairs such as BTC for ETH, ETH for ADA, ADA for BNB, and others. In the eyes of the IRS, swapping means you have sold your Bitcoin to buy Ethereum, Ethereum to buy Cardano, and Cardano to buy Binance Coin. In such a situation, you will realize gains or losses.

The same holds for spending. For example, you buy $20,000 worth of ETH and a price spike increases your investment by 300% to $80,000. You use your ETH to buy an automobile worth $80,000. You are then subject to paying capital gains tax on cryptocurrency.

The only way to avoid paying taxes on crypto is to use good old cash. Although it is not impossible, it would be difficult to find an exchange that accepts cash as a payment method in the current climate of crypto regulation. To put it simply, buying crypto with cash is not taxable, so you would not be having any IRS crypto problems once tax season takes center stage.

If you are a trader who transfers digital currencies between wallets such as Coinbase wallets (non-custodial wallet) and Coinbase Exchange accounts (custodial wallet), you are not subject to reporting detailed activities of such transfers.

Suppose you sent no more than $15,000-worth of crypto to friends and acquaintances. In that case, you are not eligible to file taxes on cryptocurrency.

Reporting your crypto activities and paying the necessary crypto trader tax is imperative.

The IRS has a zero-tolerance policy when it comes to paying taxes. Failure to adhere to crypto and taxes rules could lead to steep penalties. 
You can use [CoinTracker](https://www.cointracker.io/) (a trusted aggregator for tax services) to help you sort out your taxable crypto activities. 

Although Coinbase Twitter news has done its part in shedding more light on crypto and taxes, the onus falls on you, as a crypto user, to make arrangements for capital gains on cryptocurrency.

For more Business news, see [here](/news/category/crypto-business-news).



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