Nearly a year after publishing updated bitcoin and crypto tax requirements for individuals, the UK tax body has released similar guidelines for businesses. The tax authority also declared that it didn’t consider cryptos like BTC to be currency or securities.
HMRC Publishes Updated Bitcoin Tax Guidelines for Businesses
In its updated guidance published last week, Her Majesty’s Revenue and Customs (HMRC) — the UK’s tax body, outlined the new crypto tax requirements for businesses. The revised set of guidelines follows a similar publication for individuals released in December 2018.
The document contains information about how the various tax categories — corporate, capital gains, VAT, etc., apply to bitcoin and cryptocurrency transactions.
According to updated guidelines, all crypto exchange activities (even crypto-to-crypto trading pairs) and mining will likely incur some form of tax payment or the other. An excerpt from the document reads:
The amount of tax a business must pay will depend on its income, expenditure, profits and gains.
Bitcoin is Not Money in UK
One important takeaway from the updated guidelines was the classification of cryptos like bitcoin as not being money, stock, or marketable securities. Thus, cryptos in the UK will be exempt from stamp taxes and corporation tax legislation that deals solely with money or currency.
However, the document did provide a caveat for cryptos deemed to be securities. The HMRC also says it will evaluate each cryptocurrency on a case-by-case basis.
On the subject of receiving salaries in cryptos, the new guideline states that such salary payments will be taken as “money’s worth” and subject to income tax and insurance contributions.
UK Tax Body Mandates Thorough Record Keeping
Like the United States Inland Revenue Service (IRS), the UK’s tax agency also called for strict record keeping. The updated guidelines mandated businesses to keep accurate details of their crypto dealings in pounds sterling.
The HMRC also instructed companies to record the methods used to determine the fiat currency value of their cryptos. Unlike the IRS, the UK’s tax guidelines did a better job in differentiating between a hard fork and an airdrop.
For hard forks, the HMRC advised UK businesses to use a “just and reasonable” cost basis in dealing with tokens received via hard forks. The document declared that the HMRC held the power to investigate whether a company utilized an unfair apportionment method in evaluating the cost basis for hard forks.
Do you agree with the HMRC’s position that cryptocurrencies like bitcoin do not constitute money or currency? Let us know in the comments below.
Images via Shutterstock
The post UK Tax Office Updates Guidance on Bitcoin and Crypto appeared first on Bitcoinist.com.