HMRC – the Labour Party government tax arm – will expect buyers and sellers of crypto to provide five details as part of a crackdown on tax avoidance.
HMRC is introducing new cryptocurrency rules – with fines aimed at tax avoidance for UK households. From January, HMRC – the Labour Party government tax arm – will expect buyers and sellers of crypto to provide five details as part of a crackdown on tax avoidance.
Crypto holders will have to provide their name, date of birth, home address country of residence and National Insurance number. And providers of cryptoasset services will have to collect the value, type of cryptoasset, type of transaction and number of units.
HMRC warned: “You’ll need to verify that the information you collect is accurate by carrying out due diligence. We’ll update the guidance with information about how to do this in due course. There will be penalties of up to £300 per user for inaccurate, incomplete or unverified reports.”
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Seb Maley, CEO of tax insurance provider Qdos, said the changes will mean those buying and selling crypto will need to be “confident in their compliance”.
He said: “HMRC’s casting its net far and wide as it looks to crack down on suspected tax avoidance and non-compliance among cryptocurrency holders in the UK.
“By collecting the personal information of those buying and selling crypto – along with the values being exchanged – HMRC will know how much tax should be paid on these assets.
“In simple terms, if the income a taxpayer declares on their self-assessment tax return doesn’t match up with the amount reported by these platforms, HMRC has the information it needs to launch a tax investigation.”
When you dispose of cryptoasset exchange tokens (also known as cryptocurrency), you may need to pay Capital Gains Tax. You pay Capital Gains Tax when your gains from selling certain assets go over the tax-free allowance.
You might need to pay other taxes if you receive cryptoassets.