Tax regarding Airdrops and Forks | All about HMRC Guidelines

When it comes to airdrops and forks, the HMRC offers clear guidelines on how these taxes work. All about Tax Rules for Cryptocurrency Forks and Airdrops:

FORKS

Are Forks taxable? Since you will not be receiving any new assets when dealing with soft forks, you will not be liable to pay any taxes.

For hard forks, even if you receive a new coin, you will not be liable to pay Income Tax. Nevertheless, it is important to note that the cost basis from any new coins depends on your existing tokens from the previous blockchain and does not depend on the fair market value of those new coins on the day you acquired them.

This is important to note because if you dispose of the new coins you received from a hard fork, then you will be liable to pay Capital Gains Tax for any profits received.

AIRDROPS

If you have performed an action to earn them such as sharing social media posts or acquiring rewards for certain actions, then airdrops are considered income. Then this will be subjected to be taxed as Income Tax.

However, if you have received airdrops without performing any prior actions or following certain conditions, then they will not be considered income.

To calculate how much income you have received, you simply have to find out the fair market value of these tokens in GBP on the day you acquired them.

However, if you are liable to pay Income Tax on receiving an airdrop, and if you decide to dispose of these coins or tokens in the future, then you will also be liable to pay Capital Gains Tax on any profits received from this future transaction. The cost basis is the fair market value in GBP on the day you acquired these tokens or coins.

Cryptocurrency Tax Accountant UK

According to the guidelines provided by the HMRC, we at Crypto Accountants can ensure you are prepped and prepared for all your crypto tax needs when it comes to airdrops and forks.

To contact us, visit our website at: https://www.cryptoaccountants.live/