HMRC Warns Crypto Users to Declare and Pay Taxes in a Timely Manner
The His Majesty’s Revenue and Customs (HMRC) has issued a stern warning to crypto users, informing them that they must declare and pay taxes on digital assets promptly, or face the consequences.
The tax office released guidance on how to declare and pay taxes on their crypto holdings on Nov. 29. It begins with a clear warning: “If you do not contact us to declare your unpaid tax, you could be liable to additional interest and penalties.”
The amount of time users have to pay outstanding taxes will depend on the reasons behind the delay. HMRC suggests taxpayers pick from three options: not taking enough care, deliberately avoiding payment, or intending to pay but somehow failing.
Taxpayers who intended to pay but failed to do so will be liable for taxes from the past four years. On the other hand, those who weren’t careful enough will need to pay for the past six years, while deliberate tax evaders must pay taxes for up to 20 years.
HMRC also reminded taxpayers of the interest, charged daily from the date tax is due until it is paid. Adding taxes for the last year would be considered late and would automatically include interest.
After disclosing unpaid taxes, users will get payment reference numbers and 30 days to remit the entire sum owed. This includes “exchange tokens” like Bitcoin, as well as any non-fungible tokens (NFTs) and “utility tokens.”
Cryptocurrency is generally treated as other financial assets and is thus subject to Capital Gains Tax (CGT). The CGT rates range from 10% to 20%, depending on the individual’s income and gains.
Failing to Pay Crypto Tax in the UK Will Bring Penalties
Crypto users in the U.K. are warned to declare and pay taxes on digital assets on time, or they will suffer the consequences.
HMRC published guidance on Nov. 29, which includes the following:
- Taxpayers need to contact HMRC to declare unpaid tax within a given timeframe.
- The amount of time users have to pay outstanding taxes will depend on the reasons behind the delay.
- Taxpayers who intended to pay but failed to do so will be liable for taxes from the past four years.
- Less careful taxpayers will pay for the past six years, while deliberate tax evaders must pay taxes for up to 20 years.
- Taxpayers must include the correct interest.
- After disclosing unpaid taxes, users will get payment reference numbers and 30 days to remit the entire sum owed.
- Cryptocurrency is generally treated as other financial assets and is thus subject to Capital Gains Tax (CGT).
The U.K. tax office has issued a stern warning to crypto users to pay taxes on digital assets in a timely manner, or else they will face hefty penalties.
