16 May 2022 08:16, UTC.
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The U.K. HM Revenue & Customs (HMRC) to reduce panic among crypto investors will allow them to offset losses with future tax revenues.
Britain’s HMRC now treats investments in cryptocurrencies like investments in traditional assets and suggests that local investors suffering losses should indicate tax receipts with future profits. Kreston Reeves director of private client tax Paul Webster clarified that investors no longer need to worry about tax liability for cryptocurrency investments because “losses can be offset by future gains.”
Webster explained that the tax authority treats cryptocurrency gains as a type of capital gain with a tax payable at 20%. He added that such losses could be offset by future capital gains from other forms of investments, such as real estate.
Webster noted that through this solution, cryptocurrencies can be avoided when it is not profitable to do so. This way, investors can avoid getting rid of unprofitable digital assets to avoid additional losses. Such claims of insignificant value can now be postponed indefinitely, with the possibility of offsetting them in the future.
For every British investor, the annual capital gains allowance is £12,300 (more than $15,000), and this now applies to cryptocurrency investments as well. Investors will be able to transfer crypto assets to their spouses or civil partners without additional capital gains tax, effectively doubling the available tax-free income each year.
Not all tax authorities are willing to step in for taxpayers. For example, India, on the contrary, is tightening taxation on cryptocurrencies. In March, India’s Upper House of Parliament approved a law doubling the tax rate on cryptocurrency transactions to 30%. In April, India’s Ministry of Finance announced plans to implement a one percent tax on all transfers of digital assets over 10,000 rupees ($132) starting July 1.
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