The UK Government has announced that taxpayers will need to file their crypto profits separately when filing returns from 2025 onwards.
These changes to the Self-Assessment tax return forms will require crypto assets to be identified separately. The changes are scheduled to come into effect in the 2024-2025 fiscal year, which means that they will affect returns filed from 2025. According to theblock.co, most taxpayers in Britain don’t file tax returns because owed sums are usually removed directly from their pay.
However, self-employed taxpayers, high earners, people who need to declare investment income, as well as people with complex tax affairs usually need to complete forms. Tax authorities in the UK estimate that 12 million people were due to file this year. This new change in the way crypto profits are filed is expected to bring in GBP 10 million a year from the 2025-26 fiscal year.
Cryptocurrency use in the UK
According to a survey conducted by triple-a.io for 2021, the majority of the United Kingdom’s cryptocurrency owners were in the 18 to 34 age group (56%), and only 4.6% of them were 55 and above, suggesting that cryptocurrencies are largely owned by the younger generation. When looking at cryptocurrency ownership by income, ownership levels were higher among the wealthy, with 40% of the surveyed Britons who own cryptocurrency having incomes that exceeded GBP 200,000, and 18% of them had incomes ranging from GBP 100,000 to GBP 200,000.
Bitcoin remained a popular choice for crypto owners in the United Kingdom, with more than 62% of crypto owner respondents possessing Bitcoin. Ethereum was a close second followed by Ripple (XRP) and Tether (USDT). The survey also revealed that more than 63% of UK crypto owners have more than GBP 1,000 in crypto assets. A significant proportion of owners (19%) also hold more than GBP 10,000 in cryptocurrency. When it comes to using crypto for purchases, 2021 marked an exponential increase of 10 percentage points (y-o-y growth) in purchases made using digital assets.
The majority of non-crypto respondents mentioned a lack of knowledge for not owning cryptocurrency, which suggests that proper education and awareness could potentially increase cryptocurrency adoption. Furthermore, greater adoption of cryptocurrency payment options across merchants can also result in increased crypto adoption among the populace, given that 24.9% of respondents cited not owning cryptocurrency because their current merchants do not accept it.
