The UK tax authorities have promised to improve data gathering on cryptocurrency investors.
Even though Bitcoin reached 30,000 following days of dramatic drops in the crypto market, many investors have remained underwater. Terra and its two native cryptocurrencies have seen their value plunge in recent market selloffs, wiping out the crypto industry’s overall gains since 2021.
HM Revenue and Customs (HMRC), the non-ministerial body of the UK Government responsible for tax collection, has announced that scared investors in the UK can now balance losses against future profits in tax filings.
According to Yahoo Finance, HMRC regards cryptocurrencies like bitcoin in the same light as stock investments regarding taxation.
Investors no longer have to worry about tax responsibilities since losses may be banked with HMRC and credited against future gains, according to Paul Webster, a director in Kreston Reeves’ private client tax practice.
The director went on to say that the tax office views crypto earnings as a sort of capital gain subject to a 20% tax. Meanwhile, similar losses can offset future capital gains on other assets, such as real estate.
Investors may do nothing to avoid future losses, according to Webster, because disposing of some digital assets may cost more than their worth. According to the UK authorities, such trivial value claims can be carried forward indefinitely while being eligible for future profits offset.
The yearly capital gains allowed for every UK investor is £12,300, which also applies to crypto investments. Investors can also transfer assets to their spouse or civil partner without incurring additional capital gains tax, thus doubling tax-free earnings each year.
Governments worldwide have been clamping down on tax rules for crypto investments. As previously reported by CryptoPotato, the Indian tax body – the GST council – is considering imposing a 28 percent GST on crypto profits, putting the industry on a level with casinos, lotteries, gambling, and horse racing, owing to the speculative nature of digital assets.