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The UK Treasury said Wednesday it is updating tax return forms to ensure individuals declare profits or earnings generated from crypto as a separate category, rather than combining it with other income sources.
According to the government’s latest budget announcement, changes to the Self Assessment tax return forms are expected to be introduced during the 2024-25 fiscal year.
The change is expected to raise an additional £10 million, Maryna Kovalenko, co-founder of crypto accounting firm Kova Tax, told Blockworks.
“Adding the field to identify crypto specifically will increase awareness amongst self-lodgers of the need to declare their crypto gains,” she said. “This will result in an increase in tax revenue collected.”
The decision to add a crypto capital gains disclosure to the form marked a “positive step,” making it easier for individuals to comply with their tax obligations, Bill Hughes, Senior counsel and director of Global Regulatory Matters at ConsenSys told Blockworks in an email.
The Government’s move is also further proof that digital assets are “becoming more mainstream,” Hughes added. “Steps that regulators take to make compliance easier for the crypto ecosystem are appreciated,” he said.
Changes made to crypto taxation have likely been introduced to capture additional insights into how crypto is currently being declared, so the system can be better managed, Kovlenko said.
The data would then be used to inform future policymaking and possibly to direct tax enforcement activities.
Crypto taxation is expected to go toward funding various public services and programs, such as education, healthcare, transportation, infrastructure, defense, social security and welfare, per the announcement.
The budget is also part of a much broader plan to tackle inflation, grow its economy and reduce the debt in an attempt to avoid a nationwide recession, according to the announcement.
“The Office for Budget Responsibility, is now forecasting the UK economy will avoid a recession and supported by action taken at the Spring Budget, GDP is higher in the medium term,” Treasury said.
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