We’re seeing an increase in ‘nudge letters’ sent by HMRC to taxpayers suspected of holding crypto assets.
The rise of the nudge letter
Under increased powers of access, HMRC now works with a larger number of external organisations, exchanging and receiving information about taxpayers’ financial interests. Letters are being sent to taxpayers believed to hold crypto assets based on data provided by crypto exchanges, although HMRC expects that for the majority, no action is required.
Says Julia Gallagher, Curo’s head of tax “The so-called ‘nudge letters’ are an increasingly important tool in HMRC’s arsenal and have been used to prompt taxpayers into being ‘good tax citizens’ in several other areas. The letters give examples of Capital Gains Tax issues associated with disposing crypto assets with links to further guidance provided.”
Whilst HMRC expects most crypto asset holders will be unaffected, receiving such a letter is likely to raise questions for many who are unfamiliar with CGT and/or the self-assessment system.
Says Julia “Firstly, don’t panic if you receive a letter, it is designed to be helpful and a reminder of what you need to do. Each taxpayer needs to report and pay CGT on gains above £12,300. Any losses arising on sale of crypto assets can be offset against other gains of the same period or carried forward against future gains. Failure to report and pay tax can lead to penalties and interest, so it’s important to get it right from the start and seek advice if you’re not sure.”
How Curo can help
For help and advice on all CGT and personal tax issues, please contact [email protected] or call 01527 558539. If you have any questions about this year’s Budget, please get in touch with Julia who is able to guide and advise on all manner of changes to personal and corporate taxation.