Reminder to report and pay the correct tax liabilities on cryptoassets

Article summary

HMRC have taken cryptocurrency more seriously with detailed updates to the cryptoassets manual in recognition that it is property for inheritance tax, it is not gambling for capital gains tax. Exchanges, gifts and sales must be reported for capital gains tax. If cryptocurrency is used to pay salary, then there is liability for income tax and national insurance. HMRC have raised this with taxpayers by issuing nudge letters that related to the tax year 2020/2021 to encourage taxpayers to review their affairs and if necessary to amend tax returns. Cryptocurrency can generate a large number of transactions that may be difficult and time consuming to track if specialist software is not used. Taxpayers need to ensure that they have complete records in relation to cryptocurrency before the deadline for tax returns for 2021/22 is reached on 31 January 2023.