Digital Assets: HMRC’s daunting reminders
If you hold digital assets, such as: Cryptocurrency, it is important to consider your tax obligations, as HMRC is warning individuals about potential penalties.
In January 2024, HMRC issued a press release to remind crypto-asset users to check if they need to file a tax return. HMRC states:
“Anyone with cryptoassets should declare any income or gains above the tax-free allowance...”
Investigations:
On 23 August 2023, the Financial Times reported that HMRC are sending ‘nudge’ letters to individuals who HMRC “suspects have failed to pay the correct tax on their gains.” What’s more, HM Treasury cites that:
“…some estimates suggest that non-compliance on crypto-asset holdings could range from as high as 55% to 95%.”
Furthermore, HMRC has been known to request information from cryptocurrency exchanges, use blockchain analysis, and other extensive methods to investigate crypto asset holders.
If you fail to meet your tax obligations, you might face penalties and in some cases, be held criminally liable.
This is a stark reminder that tax may be due, and you should pay close attention to:
- Receiving cryptoassets from employment, if they’re held as part of a trade, or are involved in crypto-related activities that generate an income;
- The selling or exchanging of cryptoassets, including:
- Selling cryptoassets for money;
- Exchanging one type of cryptoasset for another;
- Using cryptoassets to make purchases;
- Gifting cryptoassets to another person;
- Donating cryptoassets to charity.
Whilst it may seem daunting to a crypto user, it need not be, provided expert advice is taken at the earliest possible opportunity, with tax compliance regularly reviewed.
How can Ellis Jones help?
The taxation of crypto assets is complex, and taxpayers should seek expert advice prior to filing a tax return if they are uncertain about their tax obligations.
If you are unsure or need assistance with crypto asset related queries, please visit our crypto specialist webpage. You can contact us on 01202 525333 or email Richard.smth@ellisjones.co.uk. Alternatively, you can also email our specialist Cryptocurrency team by emailing cryptocurrency@ellisjones.co.uk.
How can we help?
When you submit this form an email will be sent to the relevant department who will contact you within 48 hours. If you require urgent advice please call 01202 525333.
