April 19, 2024
UK's 'Help with Fees' Program Excludes Cryptocurrency from Disposable Income Definition
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UK’s ‘Help with Fees’ Program Excludes Cryptocurrency from Disposable Income Definition

British citizens seeking legal assistance through the proposed “Help with Fees” (HwF) scheme will not have their cryptocurrency holdings considered as disposable income, according to the Ministry of Justice’s response to a public consultation.

The HwF scheme aims to provide financial support for court or tribunal fees to individuals with low income and minimal savings, ensuring that financial barriers do not prevent people from accessing the legal system. The proposal originally included an amendment to the definition of disposable capital, which would encompass ‘savings and investments,’ with a ‘non-exhaustive list’ of examples, including cryptocurrencies.

The majority of respondents supported this proposal, as it helped account for investments that are not readily available as liquid assets. However, some respondents disagreed with the specific proposal, arguing that applicants should not be penalized for having savings and investments, particularly pensioners and self-employed individuals. There were also concerns that the non-exhaustive list was too vague and required more clarity, especially regarding the inclusion of cryptocurrencies.

In response, the government clarified that it would not provide an exhaustive list of what constitutes ‘savings and investments’ to avoid creating unnecessary risk by omitting certain types of capital or those that may develop in the future. The Ministry confirmed that cryptocurrencies were already covered by the current definition of capital under the Fees Orders and would continue to be included under the proposed definition. The government plans to review its list in the public guidance accompanying HwF applications to assist applicants in determining whether certain types of capital are covered in the existing definition.

The public response also indicated that individuals with savings or investments exceeding a £16,000 threshold would be expected to use these resources to cover legal fees before seeking assistance from the HwF scheme.

The UK has been moving towards introducing legislation that would subject cryptocurrencies to similar regulations as traditional assets in the country. The Financial Services and Markets Bill is expected to empower the Treasury, Financial Conduct Authority (FCA), Bank of England, and Payments Systems Regulator to propose and enforce rules for cryptocurrency-related businesses.

Image by frimufilms on Freepik

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