Cashback

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Cashback
What is cashback?
Some large providers (such as crypto.com) offer users a cashback card, which is like a debit card, and can be used to make purchases of goods and services in fiat from most retailers (ie for your groceries, buying a car or a TV). 
Cashback rewards are received in cryptoassets (ie in CRO/MCO on crypto.com) for using the cashback card, based on the amount of purchases made with the card.
The user needs to add funds to the cashback card before it can be used to make purchases. Some users top up the card with fiat sterling from this bank account. However some users top up their cashback card with cryptoassets and in this situation they are making a disposal of their cryptoassets for tax purposes when they top up the card. 
Tax treatment of cashback
Income Tax
If the taxpayer is a ‘financial trader’ in cryptoassets or the cashback is received in the course of another trade, these cashback rewards will be treated as taxable trading income per their guidance at BIM100210.  
There is no HMRC guidance on the tax treatment of cashback rewards received in cryptoassets, however there is guidance at BIM100210 and Statement of Practice 4/97 on the receipt of cashback in general and this is likely to apply.
HMRC state at point 20 of Statement of Practice 4/97 "A sum, however described, which is received by an ordinary retail customer as consideration for the purchase by the customer of goods or services should not be regarded as a taxable receipt in computing profits under Case VI. This is the case whether the payer is the provider of the goods or services or another party with an economic interest in ensuring the transaction takes place."
If this HMRC guidance is also applied to cryptoasset cashback rewards, it means that cashback rewards are not taxable income, where they are not received in the course of a trade. 
Capital Gains Tax
The sterling value (at the date of receipt) of the cryptoasset tokens received as cashback rewards, becomes the capital gains tax acquisition cost of the tokens; even though their receipt was not taxable income.
This acquisition cost is to be deducted from the disposal proceeds of a later disposal of those tokens (which is subject to capital gains tax).
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Contents
What is cashback?
Tax treatment of cashback
Income Tax
Capital Gains Tax