**U.K. Government Warns of Penalties for Unpaid Taxes From Crypto, NFT and Utility Token Holdings**
In an attempt to crack down on unpaid crypto taxes, the UK government is urging cryptocurrency users to voluntarily disclose their capital gains or income related to digital assets such as cryptocurrencies, non-fungible tokens (NFTs), and utility tokens.
**Voluntary Disclosure Urged**
The HM Revenue & Customs released an announcement on Nov. 29 advising crypto holders in the UK to voluntarily report their unpaid capital gains and income taxes from digital assets to avoid potential penalties.
According to the guidelines, crypto asset holders are being encouraged to carefully assess the extent of their unpaid crypto taxes. The number of years to disclose depends on the degree to which the individual has notified authorities or paid previous taxes.
**Ranging Penalties**
Those who have taken “reasonable care” in managing tax affairs will need to pay taxes for 4 years, while those who “did not take care” have to pay what they owe for 6 years. Meanwhile, individuals that “deliberately misled HMRC” will have to pay taxes owed over a maximum of 20 years.
Failure to disclose unpaid capital gains and income taxes from digital assets within the 30-day timeframe could result in repercussions, including actions taken by the Treasury to recover unpaid amounts.
**Improved Reporting Requirements**
As part of the government’s efforts to improve tax reporting requirements, the UK is planning to introduce a dedicated section in self-assessment tax return forms for cryptocurrency holders to disclose their gains. This change, expected to be implemented in the 2024-25 fiscal year, aims to streamline reporting procedures and enable tax officials to more effectively cross-reference customer information.
**Regulating Crypto Assets**
In addition to tax regulations, the UK government has also announced its final plans for regulating crypto assets under the Financial Conduct Authority (FCA). The intention is to make the UK a global hub for the cryptocurrency industry.
The aim of these measures is to ensure that taxpayers accurately report their cryptocurrency-related income and capital gains, and to provide tax officials with the necessary tools to enforce compliance. By issuing these warnings and implementing stricter guidelines, the UK government is taking proactive steps to address the issue of unpaid crypto taxes and regulate the cryptocurrency industry within its borders.
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