HM Revenue & Customs (HMRC) is issuing a reminder to individuals engaged in crypto asset transactions to verify their Self Assessment tax return requirements for the 2022-23 tax year. As crypto usage surges, ensuring proper tax compliance is crucial to avoid potential penalties.

Taxability of Crypto Gains and Activities:

• Any crypto-related income or gains exceeding the tax-free allowance must be declared on a self-assessment tax return.
• This encompasses receiving crypto as salary, holding it for trade, or engaging in income-generating crypto activities.
• Tax implications extend to selling or exchanging crypto, purchasing goods with it, gifting it, and charitable donations.

Self-Assessment Deadline and Verification:

• Timely completion and submission of tax returns is mandatory to avoid late-filing penalties before 31st January. 
• HMRC offers a user-friendly online tool to assist individuals in determining if they need to file a Self Assessment return.

HMRC Assistance and Resources:

• Myrtle Lloyd, Director General for Customer Services, emphasises: “Crypto-related income must be included in tax returns. Timely checks are crucial, especially with the deadline approaching. Extensive online resources and support are available to guide taxpayers.”
• HMRC provides a dedicated webpage, video tutorials, help sheets, and live webinars on GOV.UK to inform and guide taxpayers.
• Self-assessment returns and tax payments can be submitted securely through the GOV.UK website and HMRC app.
• HMRC’s free app facilitates the quickest and easiest tax bill payment. Alternative payment methods and support for payment difficulties are available online.
• For individuals facing payment challenges, HMRC offers the Time to Pay scheme for debts under £30,000, allowing for affordable payment arrangements.

Penalties for Late Filing and Non-Compliance:

• An initial £100 fixed penalty Applies even if no tax is owed or paid on time.
• Daily Penalties: Additional £10 daily penalties accrue after three months, capped at £900.
• After six months, a 5% or £300 penalty (whichever is greater) is applied to the outstanding tax, followed by another 5% or £300 charge after 12 months.
• Additional 5% penalties are imposed on unpaid tax at 30-day, 6-month, and 12-month intervals. Interest will also be charged on any late payments.

HMRC encourages all individuals participating in crypto transactions to verify their tax obligations and utilise the extensive online resources provided. Timely compliance ensures avoidance of penalties and promotes responsible financial conduct.