Cryptoassets and tax

Cryptocurrency? Bitcoin? The blockchain? Did you dive in as an early uptaker or are you still getting used to the terminology?

From the start, the cryptoasset sector has attracted people fascinated with emerging technology and keen to explore its potential for wealth creation. Inland Revenue has released guidance on various aspects concerning cryptoassets and taxation and we expect to see more over time.

There may be tax consequences resulting from cryptoassets when:

• receiving them as payment for goods and services

• using them to pay for goods and services

• buying and selling cryptoassets (trading)

• acquiring them and holding on to them as an investment, or

• mining them

Inland Revenue is looking at taxable activities involving individuals and businesses where cryptoassets are involved, generating income and profit.

Where cryptoassets have been used for remunerating employees, Inland Revenue have released guidance on cryptoassets:

• being used to pay employees as wages, salary, or bonuses

• provided by employers to employees as benefits in arrangements similar to employee share schemes

Inland Revenue have also released guidance on cryptoassets that have been airdropped or received from a hard fork.

Getting the tax right on cryptoassets is crucial as is reporting this correctly in your tax returns and it is a complex area.

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