Despite the fact that the only current guidance available as to the tax treatment of cryptoassets exists only in HMRC’s internal guidance manual published 30 March 2021, cryptoassets are becoming an area of interest for tax inspectors.
Starting in November 2021 HMRC have been sending ‘nudge’ letters to UK domiciled individuals they have identified as holding crypto-assets to encourage them to ensure they have paid the correct amount of tax. Although receiving a letter like this does not mean that you will have done anything ‘wrong’ it does mean that you must be very careful to declare any taxable transactions either in the past or future as HMRC look more favourably on those who come forward admitting genuine errors as compared with those who are ‘prompted’ to amend.
HMRC have also made a deal with popular exchange service Coinbase to share data with HMRC relating to customers who received more than £5,000 equivalent of cryptocurrency.
What do I need to know?
Transactions of cryptoassets can attract tax but this will depend on the number, type and values of the transactions you are making.
If you own enough cryptoassets with exchanges that have agreed to share information with HMRC then HMRC will already be aware of your assets.
What should I do?
HMRC consider that the onus is on you to keep a track of your transactions to make sure you are paying the correct taxes. If you own any cryptoassets, no matter how small, it is advisable to let your tax adviser know as they will be able to help you maintain detailed records.