The markets are still feeling the effects of the recent Bitcoin price crash. Though prices touched $30K after days of violent dumps befalling our crypto market, many investors remain underwater today because they don’t know when or where the next big hike will come from.
The recent market selloff led by Terra and its two native cryptocurrencies plummeting in value has at one point wiped out any profit that was made since last year.
But the good news for Britain investors spooked by the recent market crash. They can now offset their losses against future gains in tax filings; according to HM Revenue and Customs(HMRC), the arms are responsible for collecting taxes at home as well as abroad.
HMRC’s outlook on cryptocurrencies is mixed. On the one hand, they view it like any other form of equity investment for taxation purposes; however, there are some concerns due to how new and evolving this market can be, which makes predicting revenue streams difficult, if not impossible, in many cases.
Paul Webster, a director in the private client tax team at Kreston Reeves, has announced that investors can be rest assured knowing they will not be risking their tax liability on cryptocurrency investments. As a result, losses from these trades are now banked with HMRC and offset against future gains for all those who invest wisely!
The tax authority views cryptocurrency gains as a form of capital gain subject to taxation at 20%. However, these losses can be used to offset future income received from other forms such as property or investments that produce profits.
Webster suggested that since disposing of some digital assets may cost more than their value, investors could end up doing nothing to avoid additional losses. The UK authority says that such low-valued claims can be carried forward indefinitely while remaining eligible for future gains offset.
The UK has a capital gains allowance of £12300 per year, which is also applicable for crypto investments. Investors can give their spouse or civil partner assets without triggering additional tax on them since it doubles up the available tax-free gains each year.
The global community is weighing in on how best to regulate cryptocurrency investment, with many governments doubling up their forces and drafting tax policies regarding cryptocurrency transactions.