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Cryptoassets for individuals: new guidance from HMRC

21 December 2018


In recent years we’ve seen dramatically increased interest in cryptocurrencies (also referred to as cryptoassets) such as Bitcoin and Ethereum. In response, this week HMRC finally issued guidance on the taxation of cryptocurrencies for individuals.

Whilst the guidance is welcome, it does not cover all aspects of cryptoassets. Specifically, it:

  • leaves open the taxation of utility tokens (which give the holder access to particular goods or services on a platform usually using digital ledger technology);
  • also leaves open the taxation of security tokens (may give the holder particular interests in a business);
  • makes no comments about taxation of master nodes;
  • is silent on the tax situs of cryptoassets, though we understand that this is regarded as a matter for the Organisation for Economic Co-operation and Development (OECD).

Despite those omissions, HMRC has confirmed that in the vast majority of instances, the disposal of cryptoassets will:

  • be regarded as liable to capital gains tax;
  • will occur on all disposals and not just those into fiat;
  • will not be regarded as gambling and tax-free.

The main disappointment is that it will not be possible to claim a capital loss on theft of cryptoassets, as the individual still legally owns the assets and has a right to recover them.

HMRC’s guidance is in accordance with the way BKL has been treating cryptoassets, in assisting our clients with tax implications of buying and selling cryptocurrencies, mining cryptocurrencies, arbitraging exchanges and margin trading. Our clients have peace of mind and the assurance that they are complying fully with the law.

For more information on cryptocurrency tax and how our specialists can help you, please get in touch with us using our enquiry form.