HMRC has 'sent nudge' letters to crypto investors who it suspects have failed to
pay the correct tax on their gains, according to the Chartered Institute of
Taxation (CIOT).
Many crypto investors are unaware of their tax obligations due to uncertainty
over tax rules and limited understanding of the nature of crypto assets.
A chargeable disposal occurs when individual:
- Sells crypto assets for fiat currency.
- Exchanges one crypto asset for another.
- Uses crypto assets to buy goods or services.
- Gives away crypto assets to someone other than spouse or civil partner (in
this instance, the individual is deemed to receive the value of the asset
even if they do not actually receive anything).
Gary Ashford, Chair of the CIOT's Crypto Assets Working Group, said:
'Many investors may be unaware that profits from crypto assets are subject to
income tax or Capital Gains Tax (CGT) like any other asset, depending on how
they're held.
'If you receive a 'nudge letter' from HMRC, it's important to take it
seriously. Even those who don't receive a letter should review their crypto
activity and file a tax return or use the capital gains real time
transaction service if necessary.
'Sometimes tax can be due even where the investor does not think his or her
investments have been profitable. Selling, lending or 'staking' crypto
assets – or potentially even just transferring assets between crypto sites
and portfolios – will usually trigger a disposal in the tax year in
question.'
Internet links: CIOT