HMRC has reminded individuals who have engaged in the buying, selling, or exchanging of cryptoassets during the 2022/23 tax year that they may be liable for income tax or capital gains tax (CGT).
In many cases, these tax liabilities must be reported on a self-assessment tax return, with the deadline set for 31 January 2024.
The tax authority's reminder comes as many individuals may not be aware of their filing obligations, particularly if they received cryptoassets without paying or receiving traditional currency. HMRC notes that even the exchange of one cryptoasset for another is deemed a taxable event, potentially resulting in a capital gain or loss.
Failing to submit a self-assessment tax return by the deadline may lead to penalties and interest on any unpaid tax. HMRC advises individuals to promptly check whether they have a filing obligation for the 2022/23 tax year to avoid such consequences.
The capital gains annual exempt amount stands at £12,300 for 2022/23. Individuals who have realised gains surpassing this threshold must report them to HMRC and settle any associated CGT.
Furthermore, if an individual's cumulative proceeds from disposals over the tax year exceed £49,200, they must include them in their self-assessment tax return.
Cryptoassets received from an employer may be deemed as earnings from employment, with income tax and National Insurance contributions typically withheld through PAYE. Additionally, income derived from other cryptoasset activities, such as mining, may be subject to income tax.
To guide taxpayers through the complexities of cryptoasset taxation, HMRC has published comprehensive guidance and maintains a dedicated cryptoassets manual that provides in-depth interpretations of the applicable rules.
For individuals with unreported tax liabilities from previous tax years, HMRC offers a new disclosure facility specifically tailored for cryptoassets. This initiative allows taxpayers to rectify any discrepancies and fulfill their tax obligations transparently.
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