CashNews.co
HMRC has urged taxpayers to be cautious after reports of a new cryptocurrency tax scam.
A taxpayers contacted the tax body over X with three questions about tax. They asked how much profit they should pay tax on and at what percentage.
They also asked if HMRC can receive tax in the form of cryptocurrency rather than by bank transfer and if they would have to pay tax “before we receive profits from the agent working for me”.
HMRC first asked the person to clarify if their queries were all to do with gains from cryptocurrency and if they have checked the guidance on the gov.uk website.
They pointed them to a webpage with information about if you need to pay tax on cryptoassets.
The person replied: “Not exactly, someone is scamming me and said I need to pay tax before receiving funds I invested in.
“And the suspicious part is I have to pay in crypto. If the questions directly answer my queries, I can file a complaint against the person with Action Fraud.”
HMRC responded to confirm the scheme would be fake and set out the rules. They said: “That’s a scam.
“For a genuine transaction, you wait until you have the equivalent amount in pounds, then you fill out a capital gains form, (either use the real time submission, or file a self assessment tax return), then you pay the tax to HMRC direct. No crypto platform deducts the tax for us.”
You may need to pay capital gains tax when selling cryptocurrency tokens or exchanging tokens for a different type of cryptoasset.
There may also be a tax bill to pay when using your tokens to buy goods or services or when giving away tokens to another person, unless it’s a gift to a spouse or civil partner.
Some analysts are expecting Labour could increase capital gains tax with Kier Starmer warning this week the Autumn Budget will be ‘painful’.
More people have been dragged into paying the tax recently as the tax-free allowance dropped from £12,300 a year to £6,000 in April 2023.
The allowance was reduced again for the current tax year with the amount now standing at £3,000.