Cryptocurrency investment is not going away, it is here to stay. However, more than half of cryptocurrency investors admit that they have limited or no understanding of capital gains tax (CGT) and the associated tax liability on crypto transactions.
Understanding of CGT was mixed, with 34% of owners stating they had a good understanding, compared to 37% who knew little or nothing and 22% who were not familiar with it at all, according to research commissioned by HMRC.
Over two fifths (42%) of cryptocurrency owners were aware that they might be liable to pay when they bought goods and services with crypto, but only 45% thought CGT might be payable and 40% said VAT, according to HMRC.
Cryptocurrency is a decentralised form of finance, which many people purchase for investment purposes, so they are generally in scope of CGT.
Therefore, HMRC has published guidance and advice on the taxation of cryptoassets. Only three in ten owners (28%) had seen this guidance, however, although the majority (87%) agreed the advice was clear and that it helped them to understand their responsibilities (81%).
Just over half (56%) said they had received information on the tax treatment of cryptoassets from at least one source.
Perhaps surprisingly, respondents noted high levels of contact with HMRC, with 53% of owners saying they had contacted HMRC at least once in the last year, although not necessarily about cryptoassets.
If you would like to speak to a member of our team regarding crypto currency or crypto investments contact us on 020 7330 0000.