OCL: HMRC reminds crypto-asset holders of tax obligations:

HMRC is urging cryptoasset holders to check if they need to report transactions. Does this affect you?

HMRC is concerned that individuals who sell or exchange cryptoassets may not be aware that they need to file a tax return, particularly as a charge can arise even if no money (in the traditional sense) is received. A return will be needed if capital gains, including any arising from transactions in cryptoassets, exceeded £12,300, or if aggregate disposal proceeds for the tax year exceed £49,200. HMRC says that you should check your position if you have made transactions involving cryptoassets, including:

• selling cryptoassets for money
• exchanging one type of cryptoasset for another
• using cryptoassets to make purchases
• gifting cryptoassets to another person
• donating cryptoassets to charity.

In some circumstances, the receipt of cryptoassets may be liable to income tax, e.g. where received from an employer or from mining activity. HMRC does provide further guidance on its website in the form of it’s Cytoassets Manual.
Online side hustlers to feel HMRC’s wrath?

HMRC will soon start to receive information about the money people make on online selling platforms such as TikTok and Etsy. This has led to panic about a new “side hustle” tax. Who will be affected?

Despite the sensational headlines, no new taxes have been introduced. In fact, it’s always been the case that if you are trading, i.e. attempting to make a profit, you may be subject to income tax and NI on those profits. Where profits exceed £1,000, you are required to report the income and expenses to HMRC, via a self-assessment tax return, even if there is no tax to pay. For example, this could be the case if profits are below the personal allowance of £12,570 per annum. For those where the online selling is a secondary income source, the £1,000 de minimis still applies, i.e. if you have earnings from your main job that exceed the personal allowance, you can earn up to £1,000 as a self-employed individual tax free.

If you are using online selling sites, it’s important to recognise whether you are trading or not. A quick rule of thumb would be that if you are making a profit, you are likely to be trading. For example, if you are importing goods from China and listing them on Amazon at a higher price, this is clearly a trade and profits exceeding £1,000 are taxable. Likewise, if you are making goods, such as candles, and selling them on Etsy, you are trading. Whereas, if you are selling unwanted gifts, and your second-hand clothes/toys/furniture etc., you are unlikely to be trading and unlikely to be making a profit.

For more information call Tristan Wilcox-Jones, Samantha Gillham or Lucas Knight on 01225 445507 to arrange a no-obligation meeting.