The current legal status of Bitcoin is difficult to gauge in the United Kingdom. A new taxation guidance update shows there is still some confusion to be cleared up. At this time, cryptocurrencies are neither currencies nor securities.
Governments around the world always try to derive taxes from revenue streams. This applies to income tax, corporate tax, and so forth. All of these models have been in place for several decades, leaving nothing to the imagination.
Cryptocurrency Taxation in the UK
When it comes to Bitcoin and altcoins, that situation is a bit different. Depending on one’s country of residence, the legal status and taxation of cryptocurrencies can be very different.
In the United Kingdom, a bit of an unusual development has taken place. Due to a new decree issued by the HRMC, cryptocurrencies are neither currencies nor securities. The latter part of this ruling is positive, yet it comes as somewhat of a surprise.
Consumers and businesses still need to keep track of the market value of their cryptocurrency portfolio at all times. However, the proceeds are exempt from stamp tax.
There is one crucial exception: tokens used in debit transactions. Those transfers are still subject to stamp tax as per the official UK guidelines.
For users who were confused regarding airdrop and hard forked coin proceeds, this new guideline clears up a lot of mysteries.
On the other hand, it may require consumers and businesses to put a bit more effort into properly tracking transactions and associated market values.