Major implications on how cryptocurrency transactions are assessed for tax purposes
HMRC should be concerned that a Treasury committee report has called for cryptocurrency to be treated as gambling, say leading tax and advisory firm Blick Rothenberg.
CEO at the firm, Nimesh Shah said: “HMRC should be concerned that this report has been published, as they have gone to great recent lengths to try and tackle tax avoidance and evasion around cryptocurrency transactions. HMRC have categorically confirmed in their guidance that trading in cryptocurrency should not be treated as gambling.”
He added: “If taken forward, this has major implications on how cryptocurrency transactions are assessed for tax purposes, as winnings from gambling are strictly exempt for capital gains tax.”
Nimesh said: “The Treasury Committee’s report is broadly silent on the tax implications around this, and it seems that HMRC have not inputted into the findings.”
He added: “At the Spring Budget, the government announced that transactions from cryptocurrency would need to be disclosed in a dedicated section of the Self-assessment tax return from April 2024 – the Treasury Committee’s suggestion is at complete odds with that direction.”
Nimesh said: “Should the Treasury Committee’s recommendation be taken forward, it’s quite possible that the government will want to ‘have its cake’ and specific tax legislation could be introduced which continues to tax cryptocurrency activity – if this did it happen, it would dilute the overall direction that investing in cryptocurrency should be treated as gambling and sending the wrong message around the objective to protect consumers.”
He added: “At present, there is uncertainty and lack of publicity around how cryptocurrency should be taxed and the Treasury Committee’s report, albeit directed at a different purpose, doesn’t help with the continued lack of understanding around the tax treatment.”