Her Majesty’s Revenue and Customs (HMRC), the UK’s tax authority, has today updated its 2019 guidance on cryptocurrency taxation.
The revised document consolidates two existing pieces of guidance on crypto taxation (one for individuals and the other for businesses) into a single manual, and contains new details with regard to income earned from staking.
According to the publication, staking activities could represent a taxable trade but would depend on a range of factors, such as the degree of activity, nature of the organisation, risk involved and the commerciality of the activity.
HMRC states: “If the mining activity does not amount to a trade, the pound sterling value (at the time of receipt) of any cryptoassets awarded for successful mining will generally be taxable as income (miscellaneous income), with any appropriate expenses reducing the amount chargeable.”
“If the activity does amount to a trade, any profits must be calculated according to the relevant tax rules.”Ralph Payne, Chief Financial Officer at Copper, commented: "Our sector has evolved enormously since HMRC's 2019 guidance, which did not take into account the the rise of crypto staking and DeFi, or the radically increased level of crypto adoption among institutional investors and corporates.
The revised paper demonstrates HMRC's commitment to clarify the tax implications of holding and transacting digital assets today, and we would encourage all UK crypto investors read it."
"However, though this resource is undoubtedly helpful, it is not a legally binding document. We hope its publication will be accompanied by a renewed push from the FCA to expand the regulatory perimeter to include digital assets."