Government coffers are set for a £315 million boost as the taxman cracks down on investors who are evading tax on their cryptocurrencies through the new ‘Cryptoasset Reporting Framework’.
Under the new rules, anybody who owns cryptocurrencies (like Bitcoin, Ethereum, and meme coins like Dogecoin) will have to give more of their personal details to crypto service providers or risk a £300 fine from HMRC from January 2026 onwards.
Once the new framework is put in place, cryptoholders will need to provide their full name, address, date of birth, tax residence, National Insurance number, and a summary of their crypto transactions.
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This data will then be handed over from service providers to the taxman where HMRC will use it to identify whether or not cryptoholders have been paying the correct amount of tax on their crypto profits.
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If crypto service providers do not report this information, or submit inaccurate or incomplete reports, they also risk incurring a penalty of up to £300 per user.
The government estimates that this will raise up to £315 million in tax revenue by April 2030, providing a cash injection to the Treasury equivalent to employing 10,000 newly-qualified nurses for one year.
James Murray, exchequer secretary to the Treasury, said the new rules show that the government is “going further and faster to crack down on tax dodgers” to close the tax gap.
He added that the policy will “make sure tax dodgers have nowhere to hide, helping raise the revenue needed to fund our nurses, police and other vital public services”.
Meanwhile, Jonathan Athow, director general for customer strategy and tax design at HMRC, said the reporting requirements will give HMRC “the information to help people get their tax affairs right”.
He further urged all cryptoholders to check they are giving the correct information to their service providers, adding that “taking action now and having this information to hand will help you avoid penalties in the future”.
The crackdown is part of a larger drive by HMRC to tackle tax evasion. Chancellor Rachel Reeves announced in her Spring Statement that the government is investing in new tech and more staff to bring in £1 billion more from tax avoidance and tax fraud.
At the same time, HMRC’s special tax investigations into the wealthy are raising more money than ever, with the government raking in £1.5 billion this way in 2023/24.
How to report crypto profits to HMRC
If you hold cryptocurrencies and have made money from them, you will be liable to pay capital gains tax, just like any other asset.
Under current rules, crypto investors should already include any gains or income from the assets in their self-assessment tax returns, but from 2026 the taxman will have more information to make sure that this is correct.
HMRC says that capital gains tax may be due when selling or exchanging crypto, but also notes that income tax and National Insurance could apply to crypto received from employment, mining, staking or lending activities.
If you are unsure about your tax obligations, you can check whether or not you need to pay tax when receiving or selling crypto through a dedicated site on gov.uk.
You can also tell HMRC about unpaid tax on crypto using the cryptoasset disclosure service.
