The recent crypto decline has affected many investors and cost them billions. This crash is due to increasing interest rates and inflation. It has affected multiple crypto firms, including giants like Terra Luna, whose token has decreased to $0.09 from $118. The collapse of Terra Luna has caused the usually stable TerraUSD to decline.
UK investors can bank their crypto assets to avoid losing more
Fortunately, the UK allows investors to bank their crypto losses and lower their taxable income. The U.K HMRC finest differentiate Bitcoin from other assets, including shares and stock; hence it doesn’t regulate them as it does fiat currency.
The HMRC has implemented a regulation that allows crypto investors to bank their digital coins to avoid losing more money from the industry’s decline. This move could help people protect their futures.
Preston Reeves’ director of the Protect Client Tax Team, Paul Webster, advised the HMRC’s perfection of insight and how investors could protect themselves from oncoming losses. Webster states that investors in the past only worried about their tax liability when selling their crypto as the prices were rising dramatically. However, the situation has changed completely.
For this reason, Webster tries to help investors find solutions to avoid losses. He points out that many don’t realise they could bank their investments with HMRC, thus reducing taxes. The HMRC views selling crypto assets as disposal. For this reason, the regulator charges a 20% tax. Moreover, investors could use the losses they experience from selling their assets to offset profits on assets like investment property.
The HMRC has sent investors to nudge letters
The regulator advises investors to claim damages before April 5, 2027, as the status of limitations will pass in five years. Investors eligible for those who relaxed damages in May this year.
The HMRC typically gathers investor information from crypto exchanges. As a result, it is not surprising that the regulator has sent investors nudge letters to remind them of their liabilities and responsibilities.
The regulator has also stated that it understands why some investors will choose to do nothing, as disposing of their assets could cost more than the asset’s value. Fortunately, they could still go for negligible value claims.