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Posted Thu, 14 Jul 2022 12:45:38 GMT by TR47
Hi there. I am trying to understand the tax implications for interest payments on Crypto assets - and where this fits in to a self assessment. To be clear, I am not talking about crypto staking as referred to in the Crypto Manual as I am not staking any tokens. However, it may be taxed in the same way. This is synonymous to interest on a current account whereby the interest is paid at a % rate at regular intervals based on the amount I have. The interest is paid in in the Crypto currency. For example, suppose I hold 100 of CryptoA and this was in an account giving 5% per annum, and over the financial year I received 5 CryptoA in interest. Am I correct in assuming: 1) This income is subject to income tax and does not qualify to fall under the Personal Savings Allowance [see https://www.gov.uk/apply-tax-free-interest-on-savings] - i.e. falls under box 17 of the Income section of SA100 "Other Taxable Income" 2) The GBP value must be calculated from the conversion rate as of the date of interest award. E.g. Say in January I receive approx. 0.42 CryptoA (as part of my 5 CryptoA per annum) I need to take the GBP value as of the date I received the 0.42 CryptoA. Thank you in advance.
Posted Fri, 15 Jul 2022 17:27:43 GMT by HMRC Admin 20
Hi TR47

You need to decide whether you are 'trading' or not to determine the taxability for staking,
On some types of cryptoasset you can earn ‘staking’ rewards in that cryptoasset. This is a bit like earning interest on money in a bank account in that you are rewarded for locking away your cryptoassets for a certain period. However, the rewards may not be guaranteed or even defined.
Unlike interest, income from staking is not treated as savings income by HMRC. When you ‘stake’ your cryptoasset wealth, it is used to help make further transactions in that cryptocurrency in a similar way to mining.
Further guidance can be found at:
CRYPTO61110 - Decentralised Finance: Lending and staking: Introduction
CRYPTO21200 - Cryptoassets for individuals: Income Tax: staking

Thank you.

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