- HMRC calls on competent persons to give their opinion
- The agency wants to change the way it defines a capital gains event (CGT)
- This is necessary in order to modernize the infrastructure and reduce the administrative burden
Yesterday, 27 April, at HM Revenue and Customs urged the public to share their views on the DeFi tax regime. Data collection will last until June 22.
The management encourages investors, traders and counterparties to take part in the process. Its essence boils down to changing the principle of determining a capital gain event (CGT).
HMRC proposes to classify as such only those transactions in which “cryptoassets have been economically disposed of in a non-DeFi transaction.”
This framework will treat any income from decentralized products as profit in nature. Consequently, it will be subject to a fee, but the burden on the administrative apparatus will decrease.
Here are the proposed options for further tax infrastructure in this sector:
They differ depending on when the CGT event occurs, but are similar in nature. Income from DeFi products will be taxed, but at different rates. HMRC plans to use the same approach to levy fees on staking programs through liquidity providers.
Recall that in the UK, cryptocurrencies are equated with regulated financial instruments. More details at the link.