Dion Seymour comments on what the UK’s new crypto tax rules mean for holders in Decrypt

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Crypto & Digital Assets Technical Director, Dion Seymour, comments on new rules requiring crypto to be identified separately on tax returns, in Decrypt. 

Dion’s comments were published Decrypt, 17 March 2023.

“The changes to the SA form for gains from cryptoassets to be declared separately will provide HMRC with greater transparency on who is declaring their gains. This does not create any new obligations and there is already a requirement to declare any gains over the Annual Exempt Allowance (AEA). However, the proposed change will make it clearer that they need to be reported. Currently, cryptoasset gains are included within “CG Other” which may not be immediately obvious. HMRC market research found that the majority of cryptoasset owners paid their tax through PAYE, meaning that most cryptoasset owners had limited experience with SA returns. This is important as it will be harder to argue a mistake for any penalties that may be applied.

“Without a doubt, HMRC is considering how to use the information from the OECD’s “Crypto Asset Reporting Framework”. With limited resources, HMRC seeks to identify the riskiest cases and the addition of the separate identification of cryptoasset gains will make it easier for them to target customers and this will make it harder to hide in the data.

“Finally, the information will help inform HMRC of the potential “tax gap” that exists with cryptoassets. In the US, the inclusion of a field on their equivalent of a SA Return was followed by an increase in enforcement action. This might not move the dial in the UK – however, the world of cryptoassets is becoming less opaque and it is more important than ever to ensure that your client’s affairs are in order.”

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