<!–

–>

Crypto investors in the UK will be able to offset losses under new legislation, according to an expert on the matter.

Speaking in an interview with Yahoo Finance, Paul Webster, a director in the private client tax team at Kreston Reeves said that crypto investors can “bank” their losses with Her Majesty’s Revenue and Customs (HMRC)

“For the last few years, crypto investors have had to worry about tax liabilities on sale following dramatic increases, but now the tide has turned. Few investors realise that losses can be banked with HMRC and offset against future gains.”

“The sale of crypto assets is seen by HMRC as a disposal attracting capital gains tax payable at 20%. However, when a sale is made at a loss, which will be a reality for many investors, those losses can be used to offset future gains on other investments, such as investment property.”

“Losses need to be claimed within four years of the end of the tax year in which they were realised, meaning losses made in May 2022 must be claimed by 5 April 2027.”

Major crypto exchanges in the UK are required to share customer information with HMRC, which allows the regulator to send out “nudge” letters to investors, reminding them to pay their taxes.

“Investors may also find the cost of disposing of some crypto assets will be more than the value of those assets and may, understandably, choose to do nothing. Yet, even if an asset is not sold, it is possible to bank a ‘negligible value claim’ with HMRC,” Webster said.

“HMRC guidance allows claims to be made when a crypto asset becomes worth ‘next to nothing’. Negligible value claims do not require the crypto asset to be sold and losses can be carried forward indefinitely.”

“With the EU looking to ban anonymous crypto asset transactions and the Financial Action Task Force aiming to tighten money laundering regulations for exchanges and custodians, tax authorities will inevitably have enhanced data on individuals making gains. With that in mind, investors would do well to bank losses now.”

While the crypto-tax situation may be improving in the UK, Portugal, known as a haven for the asset class, might be gearing up for a complete U-turn. According to a statement from the finance minister for Portugal, Fernando Medina, the country is looking to begin taxing cryptocurrency.

Medina reportedly said on May 13:

“Many countries already have systems, many countries are building their models in relation to this subject and we will build our own… It is unbelievable how the [Socialist Party] refuses to tax fortunes created within seconds on the internet while maintaining the VAT on electricity and not increasing the minimum wage in the context of inflation.”

Mendonça Mendes, Portugal’s secretary of state for fiscal issues Mendonça Mendes said:

“We are evaluating by comparing internationally what is the definition of crypto assets, which includes cryptocurrencies. We are evaluating the regulations in this area, be it in the fight against money laundering and the regulation of markets, to present a legislative initiative that truly serves a country in all aspects, not a legislative initiative that makes the front cover of a paper”.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

• Coinsmart. Europe’s Best Bitcoin and Crypto Exchange.Click Here
• Platoblockchain. Web3 Metaverse Intelligence. Knowledge Amplified. Access Here.
• Source: https://www.coinbureau.com/news/uk-crypto-investors-can-offset-losses-under-new-tax-legislation-report/