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Spring budget is bad news for cryptocurrency investors
Miruna Constantin, tax manager at leader Audit, tax And consultant RSM UK, said: “The network could get closer to those who avoid their tax obligations on crypto profits. Yesterday, Bitcoin hit its all-time high above $69,000, but the celebrations could be short-lived for some investors with news that HMRC could examine their affairs in more detail.
‘HMRC has today published a new Consultation on the Cryptoasset Reporting Framework (CARF) and Common Reporting Standard (CRS) the same week, Bitcoin prices thawed after a two-year “crypto winter” to reach record highs.
“CARF provides for a new automatic exchange of tax information aimed specifically at crypto-asset transactions. CARF was born out of a desire to develop a global tax transparency framework intended to tackle the digitally murky waters of the crypto market.
“These rules have already been agreed internationally within OECD countries (including the UK) and they are primarily aimed at businesses. However, the Government is testing the waters regarding the potential benefits or harms of extending the frameworks’ powers to require UK reporting entities to include information on individual UK residents.
“This could make it easier for HMRC to obtain the data it needs to tackle those who fail to report and pay the appropriate amount of tax on their crypto activities.”
“It is likely that individuals will benefit from substantial capital gains during the current tax year. On March 5, the price of a Bitcoin token reached a new record high by surpassing $69,000. For comparison, on March 5, 2023, one Bitcoin cost just over $22,354. This means that people who held on to their tokens during the crypto winter would have had ample opportunity to sell them for massive gains and potentially trigger capital gains tax liabilities.
“Gone are the days when individuals could play with crypto, trigger tax liabilities, and then simply stick their heads in the sand pretending they had no idea they had to pay taxes on it. » The rules are expected to come into force no earlier than 2026 and HMRC estimates they will generate revenue of up to £95 million a year.