In a speech at Innovate Finance Global Summit on Monday 4 April, John Glen, Economic Secretary to the Treasury, set out the UK Government’s objective to turn out to be a “global cryptoassets hub”. Proposed measures embody adjustments to tax guidelines, new laws on stablecoins and a brand new NFT issued by the Royal Mint.
On the tax aspect, Glen acknowledged that the Treasury will probably be “amending the investment manager exemption to remove disincentives to UK fund managers including disincentives to UK fund managers including cryptoassets in their portfolios”.
When sure circumstances are happy, the funding supervisor exemption (IME) implies that non-UK resident individuals can rent UK funding managers to hold out funding actions with out changing into topic to UK tax. This is a concession from the final place, which is that an agent of a non-UK resident individual constitutes a UK consultant of the non-UK resident individual and subsequently makes them topic to UK tax on the earnings of the transactions undertaken by the UK funding supervisor.
The Investment Manager Regulations set out an inventory of “investment transactions” which profit from the IME and, maybe unsurprisingly given the tempo of developments within the crypto world, there isn’t a point out of crypto. Adding a transparent reference to crypto on the permitted checklist of funding transactions, because the Treasury has indicated it is going to, would help funding managers in figuring out that their actions should not topic to UK tax. Nevertheless, it stays to be seen what crypto transactions the Treasury will add to the checklist, and whether or not this may lengthen past merely buying and selling in Bitcoin and different cryptocurrencies.
More broadly, Glen additionally recommended that the tax code didn’t want “major surgery to make it work more easily for crypto”. While tax practitioners might breathe a sigh of reduction that the Treasury just isn’t planning large-scale adjustments to tax laws, there are nonetheless quite a lot of areas of uncertainty which might profit from additional consideration by the Treasury and HMRC. For instance, HMRC’s crypto handbook at present solely covers alternate tokens, leaving these holding utility or safety tokens with out steerage on how HMRC will deal with them. Additionally, HMRC’s present view is that the situs of cryptoassets will probably be decided by the residency of the useful proprietor – this was an sudden break from the normal situs guidelines and the technical foundation for the conclusions reached is unclear. Further steerage from HMRC could be extremely useful, particularly if the UK is to turn out to be the “global cryptoassets hub” the Treasury needs it to be.
Adding a transparent reference to crypto on the permitted checklist of funding transactions, because the Treasury has indicated it is going to, would help funding managers in figuring out that their actions should not topic to UK tax.