The United Kingdom has taken another step towards the regulation of cryptocurrencies by introducing a separate section for crypto assets in tax return forms.
The move comes as part of the country’s comprehensive crypto framework, which is gradually being developed. The category for crypto assets is expected to appear in tax forms in 2024-25.
UK’s report paper on national budget for spring 2023
On March 15, the UK Treasury published a report paper on the national budget for Spring 2023. The document announced the amendment of the self-assessment forms for crypto assets.
The changes were welcomed by the Chartered Institute of Taxation (CIOT), the leading professional body that analyzes national tax policies.
However, the CIOT also highlighted the need for additional measures to counter the widespread ignorance of tax payment and reporting requirements for crypto.
Earlier in March, the Financial Conduct Authority (FCA) reported to the Treasury that it is “midway through a quite ambitious reset” as the Financial Services and Markets bill passes through Parliament. When passed, the bill would give the FCA new regulatory powers over the cryptocurrency industry.
Amid the chaos in the banking sector following the collapse of Silicon Valley Bank’s UK subsidiary, finance minister Jeremy Hunt delivered the Spring 2023 budget on Wednesday.
The budget discusses the decisions the UK government has made to restore economic stability, support public services, and lay the foundation for long-term growth.
The budget also discusses tax and spending and specifically addresses “tackling promoters of tax avoidance.” The UK government is planning to introduce new criminal offenses for those who evade taxes and will consult on the issue soon.
Changes to self-assessment tax forms
The Treasury’s document mentions amending the UK’s self-assessment tax forms to account for cryptocurrency assets. “The government is introducing changes to the self-assessment tax return forms that require amounts related to cryptocurrency assets to be identified separately,” explains the Treasury notice. “The changes will be implemented on the tax forms for the 2024-25 tax year.”
The budget from the UK finance minister and Treasury follows US President Joe Biden’s recently submitted annual budget for 2024, which also includes proposed tax policies targeting cryptocurrency investors.
Biden’s budget aims to eliminate the like-kind exchange provision, also known as Section 1031, from the Internal Revenue Code.
The UK’s introduction of a separate section for crypto assets in tax return forms is a significant step towards regulating the cryptocurrency industry.
It reflects the country’s commitment to developing a comprehensive crypto framework, and it is expected to help raise awareness of people’s obligations in this area.
While the move has been welcomed by the Chartered Institute of Taxation, additional measures are needed to counter the widespread ignorance of tax payment and reporting requirements for crypto.
The UK government’s plans to tackle promoters of tax avoidance and introduce new criminal offenses for those who evade taxes are welcome developments in this regard.
As the UK’s crypto framework continues to take shape, it will be interesting to see how it compares to those of other countries, particularly the United States.