Cryptocurrency is the talk of the town right now! Its hype has taken over the world by storm amid the COVID pandemic. Right from Elon Musk to Mike Tyson to Kanye West, several people across the globe own one or the other cryptocurrencies.
If you are in this crypto train for profits, well, good move, but if you are under the impression that the profit you get out of crypto assets is viewed as a lottery or something, then my friend, you are wrong. To be precise, the gains you get out of crypto assets are not tax-free.
Guidance for filing taxes on cryptocurrency
The HMRC (Her Majesty’s Revenue and Customs) has published guidance for filing taxes on cryptocurrency in the UK. HMRC does not consider crypto assets to be money or currency. They have grouped crypto assets into four main categories. They are,
Exchange tokens: It is intended to be used as a means of payment. The most well-known token, bitcoin, is an example of an exchange token.
Utility tokens: Utility tokens provide the holder with access to particular goods or services on a platform, usually using DLT.
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