03/01/23

UK: Cryptocurrency Tax Break Offered to Foreigners Using Local Brokers to Encourage Foreign Investment.

As published on economywatch.com, Tuesday 3 January, 2023.

International buyers of cryptocurrency through regional investment managers or brokers will be exempt from UK taxation. Beginning in 2023, the UK will offer tax breaks to non-UK citizens who purchase digital currencies through authorized brokers and investment managers.

It’s possible, though, that the UK government’s tax agency is acting in this way to foster conditions favorable to cryptocurrency investors. The Prime Minister of the United Kingdom hopes that by offering these tax breaks, he can transform his country into a global center for the cryptocurrency industry.

Additionally, HM Revenue and Customs, the government’s tax agency, has stated that this exemption is crucial in luring foreign investors because it ensures that foreign investors will not be subject to UK tax merely because they employ UK-based investment managers.

As we’ve already mentioned, through local brokers and investment managers, non-resident aliens can now buy cryptocurrency tax-free. The United Kingdom’s tax agency, HM Revenue and Customs (HMRC), defended the move by saying it was necessary to entice foreign investors by protecting them from being taxed in the UK for using investment managers based in the country.

The company continued by saying that the extension of the tax break was done to protect cryptocurrency assets so that the United Kingdom could continue to serve as a hub for investment management and so that investment funds that include cryptocurrencies would not be put off from hiring managers based in the United Kingdom. The action is being taken in light of the UK’s opposition to cryptocurrencies.

Agencies look at cryptocurrency assets with suspicion because they are not regulated. Therefore, HMRC taxes digital currencies like Bitcoin in the same way as it taxes traditional investments like stocks and shares.

If you make money buying cryptocurrency and selling it for more in the UK, you must pay capital gains tax on the gain. For the fiscal year of 2022-2023, you will owe no tax to HMRC on capital gains unless they exceed £12,300.

If you make money with cryptocurrency, you may have to pay taxes on that income. For instance, if you use a Bitcoin savings account to earn interest, you might be required to pay income tax on the money you withdraw. The same logic could be applied to yield farming and cryptocurrency staking, two examples of passive income.

The crypto debit cards in the UK may be subject to taxation, so it’s important to think about that. This is because buying and selling bitcoin exposes you to potential capital gains taxes when you convert bitcoin to British pounds at the time of the transaction.