Coinbase users in the UK have been informed that their names must be given to tax authority HMRC if they cashed out more than £5,000 in fiat during the 2021 tax year.
“We would encourage you to consult with your tax or legal advisor with any questions you may have regarding tax matters and your Coinbase account activity,” Coinbase clients were informed.
This is not the first time Coinbase has warned its users of financial disclosures to HMRC. In January last year, an almost identical warning was posted for the 2019 and 2020 tax years. Indeed, the authority reached a deal with the exchange back in 2020:
“Based on further discussions with HMRC, a revised noticed was issued with reduced scope that now requires the disclosure of customers with a UK address who received more than £5,000 worth of crypto assets on the Coinbase platform,” Coinbase wrote.
According to the HMRC, the deadline to register for last year’s tax year (April 2021 to April 2022) was January 2023. A late filing penalty of £100 applies if your tax return is up to three months late, with steeper fines doled out the longer you wait.
- If you’ve sold crypto at a profit, you’ll probably pay capital gains tax on it in the UK.
- Swapping cryptocurrencies triggers an event subject to capital gains tax.
- Those trading large amounts of crypto can expect to pay income tax rather than capital gains tax.
In addition to trading, those who mine crypto as a ‘hobby’ need to declare miscellaneous income in tax returns. Coinbase advised all relevant UK users to read more about filing crypto tax with the HRMC on its website.