People buying and selling cryptocurrency in the UK must now share account and transaction details with tax authorities or risk penalties, following new reporting requirements that came into force on 1 January.
HMRC Begins Automatic Data Collection
The changes were introduced by HM Revenue and Customs, which said the measures are designed to ensure crypto investors pay all relevant taxes, including capital gains tax. Under the new rules, cryptocurrency exchanges operating in the UK must automatically collect and share accurate information about users’ transactions and earnings.
HMRC said exchanges that fail to comply could face fines. The agency estimates there may be thousands of crypto holders in the UK with unpaid tax liabilities and expects the rules to raise at least £300m over the next five years.
Price Volatility And Tax Enforcement
The move follows sharp price swings in Bitcoin, often viewed as a benchmark for the wider crypto market. Bitcoin rose from about $93,500 at the start of 2025 to a peak of nearly $124,500 before falling below $90,000 by the end of the year.
Investors who bought at lower prices and sold at higher levels may owe tax on their gains. However, authorities have historically struggled to identify and collect those payments, according to Dawn Register, a tax dispute resolution partner at BDO.
Register said HMRC has been concerned for some time about widespread non-compliance among crypto investors and that the new reporting framework will give the tax authority far greater visibility into users’ activity.
New Reporting Framework And International Cooperation
The requirements are part of the Cryptoasset Reporting Framework, or CARF, which is being introduced across dozens of countries. The framework is intended to make it easier for tax authorities to share information internationally and track cross-border crypto transactions.
Under the rules, crypto exchanges, which function similarly to banks by allowing users to exchange traditional currency for digital assets, must provide up-to-date records of users’ earnings to HMRC.
Deadlines And Voluntary Disclosure
Register warned that individuals who made crypto gains during the 2024–25 financial year may need to file a tax return by 31 January using a new crypto-specific section in the self-assessment form.
She added that HMRC is encouraging voluntary disclosure from people with unpaid tax liabilities from earlier years. A disclosure facility remains open for taxpayers who want to declare undeclared gains and unpaid tax from before April 2024.
Financial Watchdog Consults On Wider Rules
Alongside the tax changes, Financial Conduct Authority is consulting on broader regulation of the crypto sector. The consultation, which runs until 12 February, covers standards for crypto exchanges, obligations for brokers, and rules governing crypto lending and borrowing.
David Geale, the FCA’s executive director for payments and digital finance, said last month that regulation of the sector is forthcoming. He said the regulator’s aim is to protect consumers, support innovation, and promote trust, and that feedback will help finalise the proposed rules.
Featured image credits: Wikimedia Commons
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