On Wednesday, the United Kingdom published its annual budget and the session also had news for crypto investors residing in the nation. Lawmakers in the nation are planning to mandate the disclosure of crypto holdings in tax return forms.
In Wednesday’s budget session, the authorities announced that they want to mandate citizens to declare their crypto ownership in their self-assessment tax returns forms. This move is expected to raise an additional £10 million ($12 million) for the government.
Reportedly, the citizens will have to declare their crypto holdings starting next year i.e. the tax year that would start in April 2024 and end in April 2025. Under the change, crypto assets will have to be “identified separately” on the form.
According to a separate document published by HM Revenue and Customs, crypto holders will have to declare their profits on the capital gains form and will be subject to taxation when investments are sold for a profit. However, as per the current terms holding cryptocurrencies only will not incur a tax.
Notably, the UK is not just intending to bring cryptocurrencies under its tax regime, it is also looking forward to regulating the industry. The country’s Parliament has been discussing legislation around cryptocurrencies. In a discussion from January, Andrew Griffith, UK’s financial services minister, promised a deeper involvement with the cryptocurrency industry.
Additionally, Griffth stated that in order to permit the safe use of this technology while ensuring regulatory clarity and promoting financial technology investment, they will present a “timely, sensible and balanced” legislation. The Finance Ministry published its first set of draft rules for the crypto industry in February and is currently in the process of conducting a public consultation.
Sources reveal that the new rules cover a variety of things within the crypto industry, including onboarding to a trading platform, operating a blockchain node, executing payment transactions or remittances, and mining payments, among others. Furthermore, the rules cover crypto exchanges and firms offering crypto-related services in the country.
Under the rules, both exchanges and firms offering services in the country will have to secure a license from the Financial Conduct Authority (FCA) to operate in the U.K. Additionally, firms will have minimum capital and liquidity requirements placed on them and will be subject to anti-money laundering and terrorism financing requirements. The FCA will take the lead in regulating the sector.
However, the FCA hasn’t been much warm towards cryptocurrencies in the past. The regulator was also said to have rejected licenses to the majority of crypto companies. In the past months, it has also shut down crypto ATMs operating in West Yorkshire and other cities. It will be interesting to see how the UK achieves its desire to become a crypto hub with FCA being the regulator.