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Crypto holders in the UK could face increased tax rates.
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The UK capital gains tax rate on crypto is similar to the stock taxation rates.
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Cryptocurrency owners can’t use ISAs to protect themselves from tax.
A possible increase in the UK capital gains tax rate may negatively impact Britain’s five million strong crypto community. CryptoUK policy advisor Suzanne Morsfield expressed concern that raising the capital gains tax rate above the current 28% would negatively impact crypto holders.
Suzanne Morsfield is a policy adviser at the UK trade group CryptoUK. She warned that an increase in capital gains tax could have severe effects on Britain’s growing crypto investors. Crypto holders in the UK pay tax at rates that range from 10% to 18%, and 20% to 24 % for those with higher incomes.
Cryptocurrency holders face a unique problem: unlike other assets, cryptocurrencies can’t be held in Individual Savings Accounts. These accounts offer substantial tax advantages. ISAs offer individuals the opportunity to shield gains on a variety of assets from taxation, up to a yearly cap. However, this protection does NOT apply to crypto holdings. Morsfield said that an increase beyond the current cap of 28% could increase the financial burden on crypto investors who pay taxes and do not have the option to use ISAs for a safeguard.
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Morsfield noted that a tax increase could discourage new investors, and stifle the innovation in the UK’s digital asset market. This is especially true if crypto assets are taxed more than traditional financial assets.
The UK is behind the EU in terms of crypto regulation. The UK Treasury published their final proposals for crypto regulation in October 2023. The Financial Conduct Authority is currently working on the finer points of these laws. Morsfield’s remarks, which highlight the potential ramifications a capital gains hike could have on both individuals and the financial ecosystem, are a result of the fact that more than five millions Brits hold digital currencies.
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