Head of tax at TMF Global, Richard Asquith, says that Her Majesty’s Revenue and Customs (HMRC) is likely to reclassify bitcoin as a private currency.
If true, the reclassification would effectively eliminate heavy capital gains taxes, despite still being charged a value-added tax (VAT) on fees at an exchange. As a result, this might give the United Kingdom bitcoin industry a competitive edge, according to Asquith.
The move would also resemble Singapore’s current stance on bitcoin.
It “means that [bitcoin] would become much more like gold, which is VAT exempt. Gold is treated like money but it’s not a currency; it’s a pseudo currency,” said Asquith.
The reclassification could come as early as February, according to reports.