- Foreigners investing in digital currencies in the U.K. are now exempt from paying taxes.
- The new rule is only applicable if foreigners buy virtual currencies using local brokers in the U.K.
- The country has hinted that it is keen on transforming itself into a crypto paradise after a torrid relationship with the asset class.
Jan 1 heralded a new tax regime for digital assets in the U.K. targeted at foreign investors in digital assets with a focus on transforming the local digital economy.
Foreigners looking to invest in digital assets in the U.K. have been given a tax break starting on Jan 1 in line with the announcement back in December. In order to take advantage of the tax exemption, foreigners will have to purchase their virtual currencies through local brokers in the country.
The move has been hailed as one that could put the U.K. as one of the world’s leading destinations for virtual currency investors. In December, the government included crypto assets under Investment Manager Exemptions and according to His Majesty’s Revenue and Customs (HMRC), the new rule will be extended to all transactions in the new year.
“This exemption is an important factor in attracting global investors, meaning foreign investors won’t be brought into U.K. tax simply by appointing U.K.-based investment managers,” said HMRC.
The U.K. has been on the hunt for international investors as part of plans to improve the digital economy of the country.
“One of the reasons for the U.K. attracting non-resident investors (including hedge funds) is their ability to appoint UK-based investment managers without creating a risk of U.K taxation for themselves,” a government directory pointed out.
Residents in the U.K. have the tax burden of paying capital gains and income tax on virtual currency transactions. The tax requirement arises from buying or selling the asset class, mining, airdrops, and inheritance of virtual currencies.
Crypto paradise is a long, winding road for the U.K.
Prime Minister Rishi Sunak’s government has unveiled a number of changes for virtual currencies in the U.K. as part of plans to transform the local ecosystem. The U.K. parliament is deliberating the use of stablecoins as a payment mechanism, while MP Andrew Griffith stated that it is time to “tentatively seize” virtual currency opportunities.
However, the actions of the Advertising Standards Authority (ASA) have dimmed the hopes of a crypto paradise following the multiple flagging down of ads by industry operators. The ASA has been on a red-hot streak over the last 12 months, with Floki Inu, Arsenal, Papa John’s Pizza, and Crypto.com receiving warnings from the advertising watchdog.