Cryptocurrency is a digital asset that is increasingly popular in the world, both as an investment tool and a transaction. However, each country has different policies regarding crypto tax regulation and withdrawal as is the case in the United States and the United Kingdom.
America and the United Kingdom are two countries that have quite significant differences in terms of crypto tax rules. Then, how do crypto taxes compare in the two countries? Check out the following review.
Crypto Taxes in the United States
In the United States, crypto is treated as property, not as currency. This means that any transaction involving crypto will be subject to capital gains tax, just like property tax. This tax applies to anyone who sells, exchanges, or uses crypto to buy goods or services.
The amount of tax to be paid depends on the length of time a person owns the crypto before selling or exchanging it. If it is less than a year, then the applicable tax is ordinary income tax, which ranges from 10% to 37%. If it is more than a year, then the applicable tax is a long-term capital gains tax, which ranges from 0% to 20%.
In addition, there is also an additional tax of 3.8% that applies to taxpayers with an annual income of more than $200,000 for singles or $250,000 for marriage. This tax is referred to as the Net Investment Income Tax (NIIT), which is part of the Affordable Care Act (ACA).
To report and pay crypto taxes, taxpayers must fill out form 8949 and attach it to form 1040. Form 8949 contains details of the crypto transaction, such as date, purchase price, sale price, and profit or loss generated. Form 1040 contains a summary of income taxes, including capital gains tax from crypto.
Crypto Tax in the UK
Just like in America, the UK also treats crypto as property, not as currency. However, there are some differences when it comes to crypto taxation in the UK compared to the United States. One difference is that there is a tax-free allowance for capital gains from crypto.
This tax-free limit is £12,300 per year for individuals or £6,150 per year for couples. That is, if the capital gain from crypto is less than the limit, then there is no need to pay taxes. If it is more, then the applicable tax is capital gains tax, the amount of which depends on the income level and taxation status of the taxpayer.
The capital gains tax rate in the UK is 10% for taxpayers with basic income and 20% for taxpayers with high income. Basic income is income that is less than £50,000 per year, while high income is income that is more than £50,000 per year. The taxpayer's tax status can be single, married, or a civil couple.
To report and pay crypto taxes, taxpayers must fill out a Self Assessment Tax Return, which is an annual tax form that taxpayers with income outside of salary or retirement must complete. This form contains details of income, expenses, and taxes payable by the taxpayer.
Conclusion
Crypto taxes in the United States and the United Kingdom have some differences, although both treat crypto as property. These differences include the existence of tax-free limits in the UK, the size of the capital gains tax rate, and the type of form that must be filled out by taxpayers. By knowing these differences, taxpayers can prepare and fulfill their tax obligations properly.
How to Buy Crypto on Bittime
You can buy and sell crypto assets in an easy and secure way through Bittime. Bittime is one of the best crypto applications in Indonesia that has been officially registered by Bappebti.
To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. In addition, also make sure that you have enough balance by depositing some funds into the wallet. For your information, the minimum asset purchase at Bittime is Rp10,000. After that, then you can make a crypto asset purchase in the application.
Monitor the price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also Read:
Crypto Tax in Indonesia: Based on Minister of Finance Regulation PMK 68/2022
Understanding Inflation in the Crypto World
What Is the SEC and Its Role in Cryptocurrency Regulation
DISCLAIMER: This article is informational in nature and does not constitute an offer or solicitation to sell and buy any crypto asset. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices may change significantly from time to time and Bittime is not responsible for fluctuations in crypto asset exchange rates.
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