When starting to accept cryptocurrency payments as an individual or a business, it’s important to consider the legal financial regulations in the United Kingdom. The use of Bitcoin and other digital currencies has been restricted in some countries, such as China and India, but not in England. That means you can legally receive, send, buy, and sell Bitcoin and other cryptoassets in this country.
- Cryptocurrencies are not classified as legal tender in the UK.
- The Financial Conduct Authority (FCA), Treasury, and Bank of England make up the “CryptoassetsTaskforce”.
- Crypto taxes are based on the types of crypto assets and differ depending on whether you’re an individual or a business.
Can I accept crypto payments in the UK?
The short answer is yes. UK cryptocurrency regulations allow individuals to buy and sell cryptocurrencies.
The FCA published the final Guidance on Cryptoassets in July 2019. It regulates organizations that issue, create, hold, market, buy, or sell cryptocurrencies, as well as cryptocurrency exchanges, transactions, the issuance of new coins, the publication of open-source cryptocurrency software, and more. In general, it is only possible to determine the regulatory classification of particular cryptoassets by individually examining each one and looking into its unique features.
Frankly, it’s perfectly legal to purchase this asset class through a cryptocurrency exchange as well as using or conducting P2P exchanges. The only restrictions you may encounter are when withdrawing funds to or from a bank account. Some financial institutions have banned users from sending or receiving money from cryptocurrency exchanges and cryptocurrency wallets, so you need to make sure your bank doesn’t have an issue with these types of transfers.
Tax on crypto assets in the UK
Another important aspect to consider when working with crypto payments is the proper tax filing process. Individuals and businesses are subject to different Bitcoin and cryptocurrency taxes in the UK. His Majesty’s Revenue and Customs (HMRC) published cryptoassets taxation policy in December 2019. HMRC recognizes the “unique identity”of cryptoassets, meaning that they can’t be treated like traditional investments and payments. Tax rates for cryptocurrencies are determined by the activities and entities involved.
For individuals, typical gains and losses and other activities like mining, staking, etc. are taxed under capital gains. 10% is taxed for the Basic Rate Income Band (up to £50,270), 20% for the Higher Rate Income Band (up to £150,000) and the Additional Rate Income Band (more than £150,000). As you can see, depending on which tax bracket you fall under, you will pay either 10% or 20% tax on any cryptocurrency gains.
Businesses must pay one or more of the following: capital gains, corporation tax, income tax, national insurance contributions, stamp duty, and value-added tax when it comes to cryptocurrency taxes.
How can I accept crypto payments?
To start accepting crypto payments, you will need to use two things: a cryptocurrency wallet and a cryptocurrency payment gateway. To create a wallet, pick the coin that you will use for your transactions. Otherwise, you can use multiple different wallets or multi-assets wallets.
- Go to the official NOWPayments website and sign up by providing an email address and choosing a password.
- You will then need to enter your crypto wallet address. This is where the cryptocurrency payments you receive will be transferred.
- Once you provide the wallet address, the API key can be generated.
- Under the “Settings” tab, you will need to pick your preferred method of receiving cryptocurrency payments. All assets will be automatically transferred to the chosen wallet.
With a NOWPayments account, you can receive crypto payments and donations in more than 150 cryptocurrencies available on the platform. You can also send invoices to your customers and track all payments with advanced analytics.
The majority of financial regulations are focused on entities that create and distribute cryptocurrency. When it comes to individuals and businesses that receive, send, buy, or sell cryptocurrency, crypto payments in the UK are perfectly legal, and all crypto gains are taxed as capital gains. You can accept crypto payments via NOWPayments’ tools.