UK adds Crypto Declaration in Tax Forms 2023
UK adds Crypto Declaration in Tax Forms 2023 and this was recently announced by Chancellor of the Exchequer Jeremy Hunt in the annual budget on 15th March 2023. The UK government will be introducing modifications to the Self Assessment tax return forms that will require the identification of amounts related to cryptocurrencies to be reported separately. This change is set to take effect during the tax year ending in April 2025.
According to a publication by HM Revenue & Customs, the change will affect capital gains tax forms, which are used to report and pay taxes on profits made from selling investments.
Currently, the tax treatment of cryptocurrency profits in the UK is as follows:
Capital Gains Tax (CGT): If you buy and sell cryptocurrency as an investment, any gains you make may be subject to CGT. This means that you'll need to calculate your gains and report them on your Self Assessment tax return. The CGT rate in the UK is currently 10% for basic rate taxpayers and 20% for higher rate taxpayers, although there are certain exemptions and allowances that may apply.
Income Tax: If you receive cryptocurrency as payment for goods or services, or if you mine cryptocurrency as a business, any profits you make may be subject to income tax. This means that you'll need to report your income on your Self Assessment tax return and pay tax on any profits you make. The income tax rates in the UK vary depending on your income level, ranging from 20% to 45%.
Failing to report crypto income could result in penalties and legal consequences.
Under UK tax law, failure to properly report income, including income from crypto, may result in penalties for inaccuracies on tax returns. The penalties can range from a percentage of the tax owed to a maximum of 100% of the tax owed. In addition to penalties, individuals who fail to report their crypto income may also be subject to interest charges and further investigations by HM Revenue & Customs (HMRC).
In more serious cases, failure to report crypto income may result in criminal charges and prosecution. This could lead to fines, imprisonment, or both.
Therefore, it's important for individuals and businesses that engage in crypto-related activities to properly report their income and pay any applicable taxes to avoid potential penalties or legal consequences. If you're unsure about your tax obligations, it's always a good idea to seek professional tax advice.