New rules have been introduced today aimed at preventing buyers and sellers of cryptocurrency from avoiding paying tax.
Under the Cryptoasset Reporting Framework (CARF), crytocurrency exchanges are required to collect and report information to HM Revenue & Customs (HMRC) about the tax residency of users and their transactions.
Individuals who have sold crypto for a profit during the 2024-25 tax year may have reporting and tax obligations and be required to file a tax return before 31 January 2026.
The Self Assessment tax return form now has a dedicated section for crypto.
HMRC also has a disclosure facility where taxpayers can come declare undeclared gains and unpaid tax prior to April 2024.
During the 2024-25 tax year, the price of popular crypto tokens recorded significant changes with Bitcoin rising by over 23% compared to the previous tax year. Investors who bought it and then sold it for a higher value are subject to paying tax.
The tax authority says there could be thousands of crypto owners with unpaid tax bills. It estimates the changes will bring in at least £300m over the next five years.
Dawn Register, a tax dispute resolution partner at BDO, said: “HMRC has been concerned for some time about high levels of non-compliance among crypto investors.
“These new rules coming into force from 1 January will give HMRC access to a much richer dataset on cryptoasset investors and their transactions. Information will be shared automatically across international borders, allowing HMRC to better target those UK tax residents it suspects of failing to correctly declare their gains.”
HMRC’s official guidance is here.