Taxation of cryptoassets
Produced in partnership with Etienne Wong of Old Square Tax Chambers

The following Tax practice note produced in partnership with Etienne Wong of Old Square Tax Chambers provides comprehensive and up to date legal information covering:

  • Taxation of cryptoassets
  • Cryptoassets—introduction and HMRC definition
  • Bitcoin
  • Mining and staking
  • Tax treatment of cryptoassets
  • The nature of cryptoassets for tax purposes
  • Chargeable assets
  • Companies—intangible fixed assets
  • Individuals—situs
  • Conversion to sterling
  • More...

Taxation of cryptoassets

This Practice Note is about the UK tax treatment of cryptoassets, which is used in this Practice Note as a generic term for cryptocurrencies, virtual currencies, virtual assets or digital tokens.

Cryptoassets—introduction and HMRC definition

There is no single definition of a cryptoasset. The first cryptoasset was bitcoin, which is a virtual currency, but over time the focus has shifted to assets that serve different functions and achieve different aims.

HMRC defines cryptoassets as ‘cryptographically secured digital representations of value or contractual rights that can be transferred, stored or traded electronically’.

A further feature of a cryptoasset is that it use some type of distributed ledger technology. A distributed ledger is a database, also known as a consensus, that is accessible by multiple participants, with no one person responsible for maintaining it. Blockchain is a form of distributed ledger technology.

The UK Jurisdiction Taskforce (UKJT) of the LawTech Delivery Panel issued a Legal Statement on cryptoassets and smart contracts in November 2019. This explains that:

‘A cryptoasset is ultimately defined by reference to the rules of the system in which it exists. Functionally, it is typically represented by a pair of data parameters, one public (in that it is disclosed to all participants in the system or to the world at large) and one private. The public parameter contains or references encoded information about the asset, such as its

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