HMRC will begin to fine Crypto investors £300 for non-disclosure

HMRC will begin to fine Crypto investors £300 for non-disclosure

Regulations introduced in the UK as part of Crypto-asset Reporting Framework (CARF) which require crypto platforms to share detailed information with tax authorities of clients’ crypto transactions, will come into effect from 01 January 2026.

UK crypto holders will now have to provide personal details to their crypto service providers in a bid to crack down on tax evasion or they will face penalties of up to £300 from HMRC.

In preparation, HMRC is already requiring full disclosure on self-assessment tax returns 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, which will have 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 for example.

HMRC have advised 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 the data is received by HMRC from service providers, they 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.

A number of those holding Bitcoin over the last year have reported a surge in value, and 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 also be subject to fines of £300 per user for failure to disclose information, or submit inaccurate or incomplete reports.

These new measures will mean that rather than just having details of disposals in ‘some’ 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 the following information to HMRC:

• The name, address, and date of birth of each 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 crypto-asset, 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.

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 crypto-asset users to check the details you will need to give your provider.’

If you need any help with your personal tax return, whether you have crypto currency or not, please get in touch with us here at Kennedys Accounting, we will be pleased to be of assistance.