The United Kingdom’s tax, payments and customs authority has clarified its view on how cryptocurrency will be taxed. New guidelines published by Her Majesty’s Revenue and Customs (HMRC) explain the approach to crypto taxation for businesses and individuals.

It must be noted that the authority has a clear position in relation to the cryptocurrency status – it is not considered as a currency in the UK. Moreover, the guidelines use the term “cryptoassets” instead of cryptocurrency.

In relation to individuals, the policy paper reveals that crypto activity (personal investment) subject to capital gains tax. Capital gains tax should be paid when cryptoassets are sold for fiat or are used for goods and services purchasing, exchanging crypto for crypto, or gifting cryptoassets. This is a common approach used in many countries around the globe.

Further, according to the policy paper, mining activity is subject to income tax. The authority classifies this kind of activity as a business activity considering such factors as the degree of activity, commerciality, organization and risk.

However, it worth noting that in case if the mining activity does not aggregate to a trade, crypto will be taxable as income. In certain circumstances a value-added tax may be applied.

When it comes to the airdrops, such can be treated as capital gains or as income tax. For example, if the airdrop is related to any service, it will be taxed as income. However, subject to capital gains tax if it constitutes a payment for service or business activity.

Crypto companies based in the United Kingdom and companies paying wages in cryptocurrency, for their part, will pay income tax along with national insurance contributions.

Without any doubt, cryptocurrency regulations will be reviewed and updated time to time. Therefore, read our blog to keep abreast of all actual and interesting technology news.