The best tax advice for P2E in Crypto

Introduction

Play-to-earn in the crypto world can be fun, especially if you’re a fan of gaming. But it’s important that you understand the tax implications of P2E.

Taxing P2E crypto gains in the UK

P2E games are like regular video games, but instead of just earning points or rewards, you can earn cryptocurrency that you can trade for real money – it’s like being a professional gamer, but instead of winning prize money at tournaments, you can earn money by playing games in the comfort of your own home.

But what taxes do you need to pay on your P2E crypto gains?

In-game rewards

P2E players in crypto are required to pay taxes on any income they receive from their gameplay activities.

The income will be taxed as Miscellaneous Income in the vast majority of cases. However, exceptionally, we have seen people approach playing P2E games on a commercial basis and the recipt of crypto being subject to tax as trading income.

It should be noted that a subsequent sale of these tokens will also result in a CGT liability. However, only any increase in the value of the tokens since received would be taxable. If they have gone down in value, then there will be an allowable capital loss available.

Sale of in-game NFTs

The sale of NFTs purchased (and perhaps grown!) in P2E games will be, in all but the most exceptional cases, subject to CGT.

Record keeping

It is important to keep accurate records of all transactions related to your P2E gameplay activities. This includes any purchases or sales of virtual assets, as well as any earnings or losses from cryptocurrency trading.

Any income earned from P2E gameplay activities must be reported to HM Revenue & Customs (HMRC) as part of your annual tax return. Failure to report income could result in penalties or fines.

If you are unsure about your tax obligations as a P2E player in crypto, it is recommended that you seek professional crypto tax advice from a qualified accountant or tax advisor.

P2E crypto tax advice

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