UK HMRC targets crypto users for tax compliance, and they must declare and pay within tight deadlines.
Her Majesty’s Revenue and Customs (HMRC), the UK tax authorities, has taken a big step by issuing a stern instructions to cryptocurrency users. This announcement, which focuses on filing and paying taxes on digital assets within a specified deadline, has significant ramifications for cryptocurrency hodlers in the United Kingdom.
The current guidance from HMRC describes the penalties for noncompliance. The HMRC states that the amount of time unpaid taxes must be paid depends on what caused the first non-payment.
Users of cryptocurrencies who have inadvertently failed to pay their taxes over the previous four years will be held accountable. The time frame is extended to six years for those who have proven careless in their tax transactions.
On the other hand, intentional tax evaders are subject to the strictest scrutiny, with HMRC requiring payments for up to 20 years. The necessity of disclosing exchange tokens like Bitcoin, non-fungible tokens (NFTs), and utility tokens is also emphasized by this regulation.
Digital assets are included in the Capital Gains Tax (CGT) category since they are handled similarly to traditional financial instruments. The CGT rates range from 10% to 20%, depending on an individual’s earnings and their profits.
The HMRC has made it abundantly clear that there would be more interest and penalties for failing to declare and pay taxes on cryptocurrency holdings.
This problem is made much more urgent by the interest, which is charged daily from the due date until complete payment is made. Notably, this interest will be automatically applied to any taxes on past-year cryptocurrency assets currently deemed to be late. Disclosures that do not accurately include this interest will be rejected.
Taxpayers will obtain payment reference numbers after completing the disclosure process and have 30 days to pay the outstanding balance. The new announcement by HMRC is an important reminder for cryptocurrency hodlers in the UK to be on the lookout for and comply with tax legislation in order to prevent penalties.
