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The UK tax authorities have promised to improve data collection on cryptocurrency investors.
Despite the fact that Bitcoin reached 30,000 following days of dramatic drops in the crypto market, a substantial number of investors have remained underwater since then.
Terra and its two native cryptocurrencies have seen their value plunge in recent market price declines, wiping out the crypto industry’s overall gains since 2021.
No need to worry about tax liabilities
HM Revenue and Customs (HMRC), the non-ministerial body of the UK Government responsible for tax collection, has announced that scared investors in the UK can now balance losses against future gains in tax filings.
According to reports, HMRC regards cryptocurrencies like bitcoin in the same light as stock investments when it comes to taxation.
Investors no longer have to worry about tax liabilities because “losses can be deposited with HMRC and offset against future gains,” according to Paul Webster, a director in Kreston Reeves’ private client tax practice.
The director went on to say that the tax office views crypto earnings as a sort of capital gain subject to a 20% tax. Meanwhile, similar losses can be used to offset future capital gains on other types of assets, such as real estate.
Future profits offset
According to Webster, disposing of some digital assets may cost more than their value. Such trivial value claims, according to the UK authority, can be carried forward indefinitely while remaining eligible for future profits offset.
The yearly capital gains allowance for every UK investor is £12,300, which also applies to crypto investments.
Investors can also transfer assets to their spouse or civil partner without incurring additional capital gains tax, effectively doubling the number of tax-free earnings available each year.
Governments all over the world have been doubling down on tax policies for crypto investments. The Indian tax authority – the GST council – has been debating the maximum 28 percent GST rate for crypto profits.
Because of the high level of speculativeness in digital assets, the sector is being treated similarly to casinos, lotteries, gambling, and horse racing.
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Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
