Investors in cryptoassets have received further clarity on the tax treatment of their unregulated investments, as HMRC published new and updated guidance on the topic.

Cryptoassets, as defined by the tax authority, are "cryptographically secured digital representations of value or contractual rights" that can be transferred, stored, or traded electronically.

The guidance confirmed, as previously set out by HMRC, that it does not consider cryptoassets to be currency or money, and that their tax treatment is "dependent on the nature and use of the token".

It also included the treatment of staking activities for the first time, saying they might represent a taxable trade depending on a range of factors such as the degree of activity, organisation, risk and commerciality.

Staking is a process, similar to mining, through which users hold funds in a cryptocurrency wallet to help maintain a blockchain network, and can earn rewards by doing so.

HMRC's guidance said:

"If the mining activity does not amount to a trade, the pound sterling value (at the time of receipt) of any cryptoassets awarded for successful mining will generally be taxable as income (miscellaneous income), with any appropriate expenses reducing the amount chargeable.

"If the activity does amount to a trade, any profits must be calculated according to the relevant tax rules."

Talk to us about your tax planning strategy.