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As the crypto market continues to expand, government policies are evolving to keep up. In the UK’s recent October 2024 Budget, some important tax changes and new regulatory steps are set to impact crypto investors. Here’s a breakdown of what crypto enthusiasts need to know:
- Higher CGT on crypto profits
- Clearer legal status on digital assets
- Potential future regulations on DeFi and staking
Higher capital gains tax on crypto profits
One of the budget’s most direct impacts on crypto is an increase in the Capital Gains Tax (CGT). Previously, the lower CGT rate was 10%, with the higher rate at 20%. As of October 2024, these rates have jumped to 18% and 24%, respectively.
This change applies to all investments, including crypto assets, so any profits you make on selling crypto for fiat, trading between cryptocurrencies, purchasing goods with crypto, gifting, or participating in certain DeFi activities are now subject to these new, higher rates.
How does this affect you?
If you’re trading crypto regularly or cashing out larger holdings, brace yourself for a bigger tax bill. As an investor, you’ll likely feel the pinch, too, especially when planning your trades more strategically to avoid tipping into the higher CGT bracket on those high-value transactions.
With the recent changes, every trade counts a bit more, so keeping an eye on your gains could make a real difference in how much tax you end up paying.
Potential future regulations on DeFi and staking
The Budget has hinted that decentralised finance (DeFi) and staking could face closer scrutiny in the future. While no new regulations have been introduced yet, these areas are likely to become a focus in upcoming discussions as the government aims to boost transparency and compliance in the crypto space.
How this affects you
For now, DeFi and staking activities are mostly in the clear, but if you’re active in these areas, it’s smart to keep an eye on any changes. As regulations evolve, certain aspects of DeFi might come under new requirements down the line, which could affect your choices of platforms or protocols. Staying informed will help you roll with the punches if any new rules come into play.
Want to stay ahead of the game with these new crypto tax changes? Join the Crypto Tax Degens community to access expert crypto tax advice on managing higher Capital Gains Tax, optimising your trades, and staying compliant with evolving UK regulations.
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Clearer legal status for digital assets
As well as tax changes, the government is trying to clarify the legal status of digital assets, like cryptocurrencies and NFTs.
A bill introduced in Parliament proposes that digital assets will be recognised as personal property under UK law. This means crypto and NFTs would receive similar protections as other personal assets, setting out clearer guidelines for ownership rights, theft, and inheritance.
How this affects you
This change should hopefully give creators and collectors more peace of mind by officially recognising digital assets, like crypto and NFTs, under UK property laws. In other words, your crypto is now treated like any other personal property, which can help if you ever need to prove ownership, deal with a dispute, or even handle an inheritance.
While it won’t affect your day-to-day trading or transactions, this new status makes it easier for you to protect your assets in legal situations. And if you’re thinking about passing your crypto on to loved ones, you can now do so with a lot more confidence.
It’s a step toward making the crypto space feel a bit more secure and officially recognised for you here in the UK.
What’s next?
These changes mark a clear move by the UK government to increase oversight on crypto while establishing a stronger legal framework. Investors should be prepared for:
Higher tax burdens on profits – This is a call for crypto investors to get familiar with tax strategies that could help manage liabilities.
Bigger legal protections – Recognising crypto assets as personal property can make it easier to enforce rights and secure assets.
Stay ahead with the Crypto Tax Degens community
Managing these changes in crypto taxes and regulations doesn’t have to be complicated. By joining Crypto Tax Degens, you’ll gain access to exclusive crypto tax advice from UK specialist Andy Wood. Stay ahead of the game with insights on CGT increases, legal protections, and potential new regulations in DeFi – giving you the tools to make confident, compliant decisions as you grow your crypto portfolio.
Sign up now and get the guidance you need from a trusted crypto tax advisor.