In the UK, most crypto disposals receive the treatment of a capital transaction, and therefore, they are subject to (CGT). Other operations like mining, staking, airdrops, and many others are typically considered income and taxed under different regulations. The existing CGT exemption level stands at 3,000, and the taxes imposed on disposals range between 18 and 24% based on the level of income.
According to the estimates of the Financial Conduct Authority (FCA), it is estimated that seven million adults in the UK currently possess digital assets, a rise from five million in 2022. The increase in popularity, coupled with a growth in the price of crypto, has made HMRC increase its efforts in monitoring.
Concurrently, the UK financial regulator recently removed a ban on crypto-backed exchange-traded notes (ETNs) for retail investors. The policy change may bring on more players in the crypto market, highlighting the need to have tax reporting and compliance in the booming industry.
