HMRC Targets Crypto Tax Compliance with New Reporting Rules

New legislation set to be implemented from January 2026 will tighten tax compliance among UK cryptocurrency investors, aiming to ensure all individuals pay the appropriate tax on digital asset profits.

In a significant move to close the tax gap and increase public revenue, HM Revenue and Customs (HMRC) has announced new requirements for cryptocurrency holders and service providers. From January 2026, UK residents who own cryptoassets such as Bitcoin, Ethereum, or Dogecoin must provide personal identification details to each crypto service provider they use. Failure to comply with the new rules may result in penalties of up to £300.

The initiative is part of the government’s broader Plan for Change, a programme focused on ensuring fairness in the tax system and bolstering investment in essential public services, such as healthcare, policing, and education. HMRC estimates that these new reporting requirements could generate up to £315 million in additional tax revenue by April 2030 – the equivalent of funding over 10,000 newly qualified nurses for a year.

Enhanced Reporting Obligations

Under the new Cryptoasset Reporting Framework, service providers will be legally obliged to collect and share the following information about their users:

• Full name, date of birth, and residential address
• Tax residency status
• National Insurance number or Unique Taxpayer Reference (UTR)
• Summary details of crypto transactions, including disposals and gains

Providers who fail to comply or submit inaccurate or incomplete reports may also face financial penalties of up to £300 per user.

Government and HMRC Statements

James Murray MP, Exchequer Secretary to the Treasury, emphasised the government’s commitment to cracking down on tax evasion:

“We’re taking firm action to reduce tax avoidance as part of our wider reform strategy. These new crypto reporting rules will ensure that those attempting to avoid their obligations have nowhere to hide. This is about fairness—making sure everyone pays their fair share so we can continue funding vital public services.”

Jonathan Athow, HMRC’s Director General for Customer Strategy and Tax Design, clarified that the changes do not introduce a new tax, but rather enhance HMRC’s ability to monitor and enforce existing tax liabilities:

“Tax may already be due when individuals sell, swap, or transfer their cryptoassets. These new reporting measures will help us support customers in staying compliant. I encourage all crypto users to review the information they will need to provide their platforms to avoid future penalties.”

International Standards and Ongoing Tax Responsibilities

The reporting framework aligns the UK with international standards developed by the Organisation for Economic Co-operation and Development (OECD). The aim is to facilitate better cross-border information sharing between tax authorities, improving global compliance efforts.

Currently, cryptoasset holders are required to report any gains or income through their Self Assessment tax returns. For the 2024–2025 tax year, HMRC has introduced dedicated sections in the capital gains section of the return for this purpose.

Cryptocurrency gains may be subject to Capital Gains Tax (CGT) when digital assets are sold, exchanged, or otherwise disposed of. In addition, Income Tax and National Insurance contributions may apply if cryptoassets are received as income—for example, through employment, mining, staking, or lending activities.

Guidance for Crypto Holders

Those unsure about their obligations are advised to consult the guidance on GOV.UK, where users can check whether tax is owed, or voluntarily disclose any unpaid crypto tax using the Cryptoasset Disclosure Service.

Summary

This latest move underscores HMRC’s commitment to tackling tax non-compliance in the fast-growing digital asset sector. As the adoption of cryptocurrencies increases, so too does the need for transparent reporting and enforcement to ensure that tax liabilities are properly met. Crypto holders are urged to prepare early, verify their records, and cooperate with service providers to remain on the right side of the law.