HOLDERS of cryptoassets are being warned they can no longer ‘fly under the radar’ when it comes to profits on their investments.
UK-based cryptoasset holders will soon be required to disclose personal information to crypto service providers – or risk penalties of up to £300, under new regulations announced by HMRC.
The rules, which take effect from 1 January 2026, are part of the Organisation for Economic Co-operation and Development’s (OECD’s) Cryptoasset Reporting Framework (CARF) and aim to increase transparency in crypto transactions.
The CARF mandates that crypto platforms share detailed data on clients’ crypto transactions with tax authorities – a move designed to help HMRC identify individuals who may be underreporting or evading taxes on their crypto profits.
In a parallel development, HMRC has already updated self-assessment requirements for the 2024/25 tax year.
Taxpayers who own cryptoassets – such as Bitcoin, Ethereum or Dogecoin – must now include any gains or income from these assets in their tax returns.
Paul Hornby, Managing Director at JF Hornby & Co, said: ‘This is a wake-up call for crypto investors. The days of flying under the radar are over – transparency is now the name of the game.
“We strongly advise our clients to get ahead of the curve and ensure their crypto records are in order well before the 2026 deadline – and ask for support if they are struggling to make sense of this new legislation.’
HMRC stated that 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 pinpoint those who have not been accurately reporting their crypto earnings.
The Treasury estimates that the new measure could generate up to £315 million in tax revenue by April 2030.
Jonathan Athow, HMRC’s Director General for Customer Strategy and Tax Design, clarified: ‘Importantly, this isn’t a new tax – if you make a profit when you sell, swap or transfer your crypto, tax may already be due.
‘These new reporting requirements will give us the information to help people get their tax affairs right.”
