UK Tax Authority Warns Crypto Users to Declare and Pay Taxes or Face Penalties
Summary:
The UK's tax authority, HMRC, warns cryptocurrency users to declare and pay taxes on their digital assets or face additional interests and penalties. The length of time given to pay depends on the reason for their previous nonpayment. The disclosure also encompasses exchange tokens, non-fungible tokens (NFTs), and utility tokens. HMRC applies Capital Gains Tax (CGT) to cryptocurrencies, with the current rates ranging from 10% to 20% depending on individual income and gains.
The United Kingdom's tax authority, Her Majesty’s Revenue and Customs (HMRC), has sounded an alarm for cryptocurrency users about their liability to declare and pay taxes on their digital investments. The financial watchdog released a directive on November 29, cautioning crypto holders that neglecting to reveal and clear outstanding taxes could attract supplementary interest and penalties. The limitation period within which individuals are required to settle unpaid taxes is contingent on the reason for their initial nonpayment. It prompts taxpayers to self-identify as either having inadvertently overlooked, intentionally evaded, or intended but failed to pay their taxes. Those who meant to pay but were unable will be liable to remit due payments for the last four years, while those found to be negligent will owe taxes for the preceding six years. Deliberate defaulters will be accountable for all cryptos held over the past two decades. The tax authority further clarified that interest is computable from the due date till payment is made, and any outstanding tax on prior-year crypto assets will necessitate accruing interest. This levy will result in the denial of disclosure if omitted. Post declaration of unpaid dues, taxpayers will receive payment references numbers and have 30 days to pay the total amount owed. This thorough disclosure must incorporate exchange tokens like Bitcoin, non-fungible tokens (NFTs), and utility tokens. HMRC's approach to cryptocurrency is akin to other financial assets and consequently applies Capital Gains Tax (CGT) to it. The existing CGT rates vary between 10% and 20%, based on individual income and gains. Refer to U.K. tax regulation for more insights. The Magazine feature on "Real AI use cases in crypto, No. 2: AIs can run DAOs" provides additional context.
Published At
11/29/2023 12:54:23 PM
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