Cryptocurrency is a relatively new and fast-moving sector, which means that tax guidance regarding crypto keeps developing and information about it can quickly become dated. Case in point, HMRC will now have access to key information about people who use Coinbase, a cryptocurrency exchange platform, to deal in crypto assets.
We suspect that other platforms will follow suit with similar messages, as it appears the landscape is changing. Take a look at what this means for you and how it can affect the taxes you owe HMRC.
Do You Invest in Crypto?
If you do, you need to consider the active tax implications that crypto platforms now have. This means being aware of your obligations regarding HMRC, although this can be a complex matter – this is not just because the sector is continuously evolving. It’s also because managing your taxes when you have crypto assets requires specialist knowledge.
This is why hiring the services of an accountant can help you to stay on top of this ever-changing market, ensuring you’re always submitting the right information to HMRC. Crypto is different from other investments, but we can easily handle your accounts and help you to stay compliant no matter what changes.
What’s Going on with Coinbase?
Coinbase is an American-based company that specialises in cryptocurrency exchange. They’ve recently agreed to share data with HMRC about customers who received, at least, £5,000 in cryptocurrency, as the government seeks to ensure that people are paying the correct amount of tax.
This is a landmark decision that helps HMRC to stay on top of tax errors and fraud. If you receive a ‘nudge’ letter from HMRC, this doesn’t mean you’ve made a mistake in your paperwork, but it’s simply the government wanting to make sure that you’re aware of your tax obligations – meaning you need to make sure that you’re compliant to avoid a penalty.
It’s believed that the letter was only sent to investors who have reached £5,000 so, if your transactions are below this threshold, you won’t have to worry about HMRC wanting your information.
HMRC may be looking at crypto records dating from years ago, so you’ll want to have everything in order – if you find issues with your records, don’t try to hide them. HMRC prefers people to come forward and be honest.
Have You Received a Letter from HMRC (or Coinbase)?
If HMRC or Coinbase have sent you a letter regarding your crypto assets and transactions, it might be time to get a consultation with an expert, since you want to make sure you’re on top of all your taxes.
Due to the complex nature of the crypto assets’ world, it’s easy for mistakes to be made – especially when it comes to transactions and taxes, since cryptocurrency is not considered a commodity or money in the UK. So, to make sure you’re following HMRC’s rules at all times, it’s best to talk to a specialist to ensure everything is done by the law.
They can help you to analyse and better understand your particular situation, which is perfect for your peace of mind as well! Also, it’s important to consider whether you should seek professional advice even if you haven’t got a letter from HMRC or from a cryptocurrency platform – by doing this, you can be sure that all relevant taxes are paid and won’t have to worry if you’re missing something.
Why Choose Gorilla Accounting for Your Crypto Tax?
We work with several clients who invest in crypto and DeFi assets, from smaller investors who simply bought some bitcoin to mining operations and NFT investors. No matter which category you fall into, we can help.
When you choose us, you’ll benefit from your very own dedicated accountant who understands the world of crypto and can help you make sure everything is in order. You can rest assured that your tax affairs and HMRC declarations will be error-free and sent on time to HMRC.
In addition, you’ll want to choose an accountant who understands the difference between crypto assets as well; for example, trading certain Alt Coins into other crypto assets through a Fiat account has different implications in terms of when the gain or loss occurs.
As mentioned, this is a complicated subject, but we’re cryptocurrency accountants and can answer all your questions about this topic – what’s more, Gorilla Accounting can help you deal with the tax implications of crypto, with pooling crypto, with the preparation of self-assessment tax returns, and with crypto trading through a limited company.
So, speak to us if you’d like to learn more about how crypto is taxed and how much you’ll have to pay HMRC, be it in capital gains tax or income tax, for example. We’re always on hand to help!
