Do you need assistance with sophisticated cryptocurrency tax issues? Our cryptocurrency accountants can help you with a multitude of cryptocurrency tax services.
We offer a wide variety of cryptocurrency tax services, including bitcoin tax, tax compliance and reporting, tax prep, wealth management, and more, at Pearl Lemon Accountants, which is still a novelty in the world of accounting.
Whatever your cryptocurrency tax worries are, our team of cryptocurrency accountants can assist you in finding answers, resolving your crypto tax challenges, and achieving your cryptocurrency investment objectives efficiently.
Understanding the Meaning of Cryptocurrency
A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services and is protected by an online ledger and sophisticated cryptography. However, the bulk of activity in these deregulated currencies is currently focused on profit trading, with investors driving prices to almost unfathomably high levels at times.
More than 15,000 different cryptocurrencies are publicly traded, according to CoinMarketCap.com, a market analysis website. Cryptocurrencies are still gaining popularity. The total worth of all cryptocurrencies was around 2.3 trillion dollars on December 10th, 2021, down from the all high of $2.9 trillion just weeks earlier. Bitcoins, the most extensively used digital money, were estimated to be worth $932.4 billion on the open market. That’s what we mean when we say “sky-high.”
Cryptocurrencies and HMRC
HMRC was one of the first tax bodies in the world to publish precise cryptocurrency taxation guidance. Depending on the amount invested and how it was gained, cryptocurrency in the United Kingdom is subject to either Income Tax or Capital Gains Tax.
Because in the United Kingdom, there is presently no separate cryptocurrency tax a s previously stated, your cryptocurrency will be subject to either Capital Gains Tax or Income Tax.
The amount of cryptocurrency tax you’ll have to pay is dependent on the transactions you conduct with it. If you make money, you will be required to pay income tax. You’ll have to pay Capital Gains Tax if it’s decided that you’ve made a capital gain. It’s also feasible that HMRC will believe you owe both in some situations.
This implies that possessing cryptocurrencies in the UK is more complicated in terms of taxation than it is in many other countries, including the United States. You may easily run afoul of HMRC without even realizing it if you don’t have a good cryptocurrency accountant on your side, and that’s the last thing anyone wants.
How will HMRC know you own cryptocurrency?
Because cryptocurrency markets are always changing, you might be asking how HMRC could possibly know what you’ve been up to in the first place.
HMRC said a few years ago that it was working with well-known crypto exchanges to share customer data gathered via Know Your Customer records. They’re using it to send reminders to cryptocurrency investors, urging them to report cryptocurrencies to HMRC, and are contacting those who they believe are avoiding HMRC cryptocurrency taxes.
But what about your own private bitcoin exchange in the UK? Is Binance obligated to check in with HMRC? What about HMRC and Coinbase? Which cryptocurrency exchanges must provide HMRC with information?
In 2019, HMRC reported that they have approached a number of cryptocurrency exchanges operating in the UK, including Coinbase, eToro, and CEX, to acquire user data. They’ve only mentioned these three crypto exchanges thus far.
Before you exhale a sigh of relief, remember that just because HMRC hasn’t mentioned your cryptocurrency exchange doesn’t mean they haven’t contacted them. Because HMRC is cracking down on cryptocurrency, it’s safe to assume that they’ve contacted all of the major cryptocurrency exchanges in the UK, such as Binance, Kraken, KuCoin, Gemini, CoinJar, Crypto.com, Bittrex, and Gate.io.
What Can Pearl Lemon Accountants As Your Cryptocurrency Accountant Provide?
It’s not always easy to determine how to pay taxes on cryptocurrencies. You’ll need knowledge of the intricacy and particular nature of these transactions to effectively estimate the profit/gain and pay the least amount of tax legally achievable. Even if you understand the fundamentals of cryptocurrency, the complicated UK tax regulations that are arising around this still-evolving type of investing might be perplexing (even to us at first!).
Most accounting companies simply cannot provide you with the amount of cryptocurrency accounting expertise that we can. That’s due in part to the fact that our accounting teams have been working in cryptocurrency for years, and the skills and understanding they’ve gained as a result of that, as well as fundamental continuous accountancy education surpass that of many other accountants.
Is it Really Necessary for Me to Declare Cryptocurrency on My Taxes?
Don’t make the mistake of thinking that your actions aren’t being scrutinized by HMRC. In our significant experience, we’ve seen far too many businesses suffer as a result of poor tax preparation and financial penalties. Cryptocurrency traders and firms are no exception.
Because HMRC is now actively examining bitcoin activity, maintaining cryptocurrency tax compliance is more important than ever.
Cryptocurrency trading is completely legal in the United Kingdom, as long as you submit any earnings to HMRC, which implies you’ll have to pay tax on them.
However, as we have stated, cryptocurrency taxation may not always be simple. We can assist you in sorting through the jumble of data around the repercussions of all your crypto activities.
We can walk you through the most recent legislation regarding purchasing and selling cryptocurrencies, mining, arbitraging exchanges, margin trading, and converting your investments for fiat currency, among other things. And, perhaps more significantly, keep you out of trouble with HMRC!
Using a Cryptocurrency Accountant to Keep Track of Your Coins
Apart from taxes, a bitcoin accountant can assist you with keeping track of your cryptocurrency in the same manner that we assist you with your fiat currency. We can also advise you in taking advantage of any tax breaks available to you in order to reduce the amount of tax you pay on your cryptocurrency. We can even help you in keeping your money safe, which is more vital than ever as the number of organized bitcoin scams and hacks rises.
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