'Happy days': Crypto Twitter hopes UK's gambling designation means no capital gains tax

Quick Take

  • The UK House of Commons Treasury Committee released a report today arguing that trading in assets like bitcoin and ether should be regulated like gambling.
  • Crypto traders were quick to question, often in a tongue-in-cheek way, whether such a move would protect their profits from capital gains tax. 

There are few phrases that strike fear into the heart of a crypto punter as much as "capital gains tax."

So when the UK House of Commons Treasury Committee released a report today arguing that trading in assets like bitcoin and ether should be regulated like gambling, traders in the space were quick to point out, gleefully, that such a designation would see them protected from capital gains levies. 

"So zero taxes on gains? Yasss," responded one Crypto Twitter lurker to the news. 

"Good thing gambling winnings not taxed in the UK," commented another named Mellow Yellow

Those were just two of dozens of responses to the report, and they're not wrong. In the UK, gambling income is not taxed, according to tax expert Nimesh Shah, chief executive of tax and accounting advisory Blick Rothenberg. "From a tax perspective: happy days for anyone invested in crypto because it is completely exempt from a tax perspective," he said.

The regulation of cryptocurrencies as gambling instruments, in the committee's view, would protect retail investors from its volatility and the risks associated with scams and illegal activity. The report echoes the view of financial services lobbying groups in the country that have come out against a potential plan by the UK government that would bring crypto-assets within the regulatory framework of traditional finance. 

Unwanted tax bills

But such a move could also protect crypto fans from unwanted tax bills — at least on paper. To be clear, the committee doesn't make policy — it simply scrutinizes legislation and makes suggestions.

"Profits are not taxed and losses are not deductible," Shah said. "If the Select Committee pushes this as gambling then the Treasury should kiss goodbye any tax benefits from people investing in cryptocurrency."

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