Digital currencies such as Bitcoin are to be subject to corporation tax, income tax and capital gains tax, according to guidelines set out by HMRC.
The document does not refer to cryptocurrencies as currency', but states they will be treated the same way as traditional monies like pound sterling or the dollar.
Previously, Bitcoin and its peers, such as Litecoin and Dogecoin, had been treated as vouchers and thus subject to VAT, but this has now been scrapped.
The change in tax regime means users of digital currencies will be charged depending on their income and profits, rather than a flat 20 per cent per transaction.
The highest cryptocurrency earners in the UK could be charged up to 45 per cent in income tax, up to 28 per cent in capital gains tax and up to 21 per cent in corporation tax.
The move sees the UK following in the footsteps of Germany, which also recently switched away from VAT to charging income and profit-based taxes, and is part of a wider trend to normalise the way cryptocurrencies are dealt with.
Although the Financial Conduct Authority, which oversees the financial services industry in the UK, has said it does not regulate digital currencies and has no intention of doing so, the European Banking Authority (EBA) is examining their use and considering possible Europe-wide regulation.
The body has created a taskforce to examine the risks to consumers using Bitcoin and others, as well as looking at the use of cryptocurrencies for money laundering and the purchase of illegal goods, and will discuss what kind of regulations, if any, should be put in place.
Any laws implemented off the back of this consultation would affect all European Union residents, including those in the UK.
The change in HMRC's treatment of cryptocurrencies follows the collapse of Mt. Gox, formerly the largest Bitcoin exchange, which filed for bankruptcy on 28 February.
The organisation confessed it may have lost up to half a billion dollars worth of coins following an attack on its systems, affecting 60,000 customers in Great Britain and 180,000 in the US.
The vice finance minister of Japan, where the exchange was headquartered, has since called for global uniformity in the regulation of Bitcoin.
-
Asus ZenScreen Fold OLED MQ17QH reviewReviews A stunning foldable 17.3in OLED display – but it's too expensive to be anything more than a thrilling tech demo
-
How the UK MoJ achieved secure networks for prisons and offices with Palo Alto NetworksCase study Adopting zero trust is a necessity when your own users are trying to launch cyber attacks
-
FTC announces probe into big name AI investmentsThe inquiry will examine the relationship between major cloud providers and AI companies, including Microsoft and OpenAI
-
Three ways risk managers can integrate real-time controls to futurize operations at the bankWhitepaper Defining success in your risk management and regulatory compliance
-
Why are AI innovators pushing so hard for regulation?Opinion Tech giants are scrambling to curry favor with lawmakers amid a pending regulatory crackdown
-
Sundar Pichai: AI keeps me up at nightNews The Google chief warned that recent AI developments will have a profound impact on society
-
ChatGPT needs ‘right to be forgotten’ tools to survive, Italian regulators demandNews ChatGPT users in Italy could be granted tools to have false information changed under new rules
-
US starts exploring “accountability measures” to keep AI companies in checkNews The move follows Italy’s recent ban on ChatGPT due to data privacy concerns
-
Sharpen your manufacturing competitive edgeWhitepaper Smarter asset management
-
IMF urges El Salvador to remove Bitcoin as legal tenderNews The country sought a $1.3 billion loan from the IMF last year, although this has been reportedly hindered by the fund’s Bitcoin concerns
