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

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, exchange tokens, utility tokens and security tokens
  • Bitcoin
  • HMRC guidance, income tax, CGT, corporation tax
  • The nature of the cryptoasset
  • The nature of the activity
  • Loss and fraud
  • Employment tax, inheritance tax
  • Situs
  • Conversion
  • More...

Cryptoassets, exchange tokens, utility tokens and security tokens

It started with Bitcoin (see below). An avalanche of other non-traditional currencies then followed.. As the landscape continued to evolve, the focus shifted, in time, away from currency-equivalents to assets that serve different functions and achieve different aims. For a fuller discussion of these developments, see Practice Note: cryptoassets—essentials.

This Practice Note discusses UK tax in the context of cryptoassets and transactions in or involving cryptoassets.

Most hearing the term ‘cryptoassets’ would know the type of assets the term is intended to capture. As it is used by HMRC, the term refers to ‘cryptographically’ secured digital representations of value or contractual rights that can be:

  1. transferred

  2. stored

  3. traded electronically

That description was first used publicly by HMRC in December 2018, and it continues to be used today.

Although few would take issue with the description, it is interesting to note the following from the Legal Statement on cryptoassets and smart contracts issued in November 2019 by the UK Jurisdiction Taskforce (UKJT) of the LawTech Delivery Panel:

‘…Although one can describe and conceptualise the process as a transfer (and that is the word we have used in this Statement), it is not really analogous to the delivery of a tangible object or the assignment of a legal right, where the same thing passes, unchanged, from one person to another. Instead, the transferor typically

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