HMRC has updated its guidance around operating Pay As You Earn (PAYE) if you pay your employees with assets that can be sold or cashed in to include cryptoassets.
The guidance previously covered assets such as stocks and shares. However, it has now been extended to include some cryptoassets, which are now classed as readily convertible assets.
Cryptoassets(or ‘cryptocurrency’ as they are also known) are cryptographically secured digital representations of value or contractual rights that can be:
- transferred
- stored
- traded electronically.
HMRC does not consider cryptoassets to be currency or money. This reflects the position previously set out by the Cryptoasset Taskforce report (CATF). The CATF have identified three types of cryptoassets:
- exchange tokens
- utility tokens
- security tokens.
HMRC’s guidance on paying employees with assets that can be sold or cashed-in states that, if you offer non-cash payments to an employee that count as a readily convertible asset you’ll have to calculate and deduct PAYE tax and National Insurance contributions (NICs) on that payment.
