The UK’s growing acceptance of cryptocurrencies is making it a great place to invest in the sector. However, it is important to understand that the industry is still new and largely unregulated. This means you may face challenges when trying to open a business bank account or secure funding. Traditional financial institutions may be wary of dealing with businesses that rely heavily on cryptocurrencies due to volatility, fraud and regulatory uncertainty. It is also worth remembering that you will be liable to pay tax on any profit you make from trading or investing in crypto.
High-potential crypto investments in the UK can be seen as a disposal of the asset, and is therefore subject to Capital Gains Tax. Selling for fiat currency like GBP is viewed as income, and so is taxed accordingly. It is important to keep records of all transactions.
UK’s Most Promising Crypto Investment Opportunities
Lending and staking are new ways to make money from crypto assets in the UK, and HMRC has recently launched a consultation on how they will be treated for tax purposes. Koinly will be participating in the consultation, and we will update this article as soon as we receive further guidance from HMRC.
Incorporating your crypto portfolio into a limited company structure can offer certain tax benefits for UK investors. It can also streamline long-term planning, and make it easier to transition ownership if necessary. However, running a company comes with ongoing compliance and administrative costs, including the expense of hiring professionals familiar with UK crypto regulations.