HMRC to fine crypto investors £300 for non-disclosure

The regulations introduced in the UK are part of the OECD Cryptoasset Reporting Framework (CARF) and require crypto platforms to share detailed information with tax authorities of clients’ crypto transactions.

From 1 January 2026, UK crypto holders will have to provide personal details to crypto service providers in a bid to crack down on tax evasion or face penalties of up to £300 from HMRC.

In addition, HMRC is already requiring full disclosure on self assessment forms for the 2024-25 tax year, so taxpayers who own crypto – like Bitcoin, Ethereum or Dogecoin –will have to include any crypto gains or income in their tax returns with a new dedicated section in the capital gain pages.

It is important to note that capital gains tax (CGT) may be due when selling or exchanging crypto if a gain is made, while income tax and national insurance could apply to crypto received from employment, mining, staking or lending activities.

HMRC said the ‘new rules will help unmask anyone evading tax due on their crypto profits. Those who don’t comply risk a £300 fine from HMRC’.

Once data is received from service providers, HMRC will be able to identify those who haven’t been correctly paying tax on their crypto profits.

The Treasury estimates the measure will raise up to £315m in unpaid tax by April 2030, the same amount needed to fund more than 10,000 newly-qualified nurses for a year.

Crytpo values have shot up since the election of president Donald Trump, who has come out in strong support of the sector, in a shift from earlier US policy.

Anyone holding Bitcoin over the last year will have seen a massive surge in value from £38,000 in August 2024 to £86,000 in January 2025, with the latest price standing at £80,000.

The latest figures from the Financial Conduct Authority (FCA) found that seven million people - 12% of the UK population - own some form of digital currency, up from 10% in 2023.

Service providers will begin collecting data on users’ activities from January 2026, and will be subject to fines of £300 per user for failure to disclose information, or submit inaccurate or incomplete reports.

Danielle Ford, partner and head of tax disputes at HaysMac, said: ‘HMRC has always maintained a strong interest in cryptoassets, not least because of their opacity for users.

‘Whilst HMRC first published their view of the tax treatment of crypto in December 2018, it has previously not had the information available to police this, however the CARF will be a game-changer in this regard.

‘These new measures will mean that rather than just having details of disposals in limited circumstances, HMRC will have full details of UK users of crypto including all transactions and details of their held assets.’

From 1 January, crypto service providers, platforms and trading exchange must collect and report to HMRC:

• The name, address, and date of birth of individual crypto investor;
• the individual’s tax residence;
• their national insurance number or tax reference; and
• details of crypto transactions, including the value, type of cryptoasset, type of transaction and number of units.

The CARF is being adopted by 52 countries so far with the UK one of the first countries to roll out the new rules, with the EU, Jersey, Guernsey, Isle of Man, South Africa and Uganda set to implement by 2027, and the US, Bahamas, British Virgin Islands, St Vincent, Seychelles, Singapore, Thailand, Turkey, Hong Kong and UAE all set to start information exchange by 2028.

So far, Australia, Argentina, El Salvador, India, Panama and Vietnam, which have been identified by the OECD as crypto hubs, have not yet signed up to CARF.

Jonathan Athow, HMRC’s director general for customer strategy, said: ‘These new reporting requirements will give us the information to help people get their tax affairs right. I urge all cryptoasset users to check the details you will need to give your provider.’

There is also an HMRC cryptoasset disclosure service for voluntary disclosures, but tax experts warn that any crypto investors affected by CARF should seek professional advice first before taking the decision to use the CDS.

The CARF is a new measure which does not replace or amend existing legislation. The statutory instrument will be made under the powers in s136 of Finance Act 2002 and s349(2) of Finance (No.2) Act 2023.

Source - Business & Accountancy Daily

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