Crypto users forced to share account details with tax officials

Under the changes, which came into force on January 1, people buying cryptocurrency in the UK must now provide their account details or face fines.

This move by the UK tax authority is intended to ensure that all relevant taxes are paid on the purchase and sale of cryptocurrency, including capital gains tax.

HMRC will begin automatically collecting information on all users of cryptocurrency exchanges, which are essentially industry banks, in a bid to start collecting tens of millions in unpaid taxes.

The change comes as the financial watchdog continues to consult on tighter regulation of the industry, including measures to stop insider trading.

Bitcoin's value, often seen as a barometer of the entire industry, rose from around $93,500 (£69,500) per coin at the start of 2025 to a high of nearly $124,500 before falling below $90,000 by the end of the year.

Investors who bought when values ​​were lower and sold when they were higher must pay taxes, but authorities have historically found it difficult to collect them, says Dawn Register, a tax dispute resolution partner at accounting firm BDO.

“HMRC have been concerned about the high level of non-compliance among crypto investors for some time,” she says.

The new rules coming into force will make it much more difficult for crypto-rich individuals to hide any untaxed income by providing tax authorities with much more information about cryptocurrency users and their transactions.

Cryptocurrency exchanges, which act as banks for the industry by allowing people to exchange standard currency for virtual coins, must now ensure that they automatically share up-to-date and accurate earnings reports with all their users.

Failure to do so may result in fines being imposed.

These Crypto Asset Reporting Framework (CARF) rules are being implemented in dozens of other countries, which will make it easier for tax authorities to collaborate internationally to share information.

HMRC estimates there could be many thousands of cryptocurrency holders in the UK with unpaid tax bills, and they hope the new rules will bring in at least £300 million over the next five years.

Ms Register warns that anyone who made a profit from cryptocurrency in the 2024-25 financial year may have to file a tax return by January 31 through a new special section on the self-assessment form.

“HMRC is also keen to encourage voluntary disclosure in cases where people have had unpaid taxes in previous years and want to put their affairs right,” she says.

“HMRC operates a disclosure mechanism so taxpayers can disclose undeclared profits and unpaid taxes until April 2024.”

Meanwhile, the Financial Conduct Authority is holding a public consultation until February 12 on other proposed cryptocurrency rules, which include standards for cryptocurrency exchanges, new requirements to ensure brokers behave responsibly, and rules for crypto lending and borrowing.

Commenting on a consultation last month, the authority's chief executive for payments and digital finance, David Gil, said regulation was coming.

“Our goal is to create a regime that protects consumers, supports innovation and promotes trust. We welcome feedback to help us refine these rules,” he said.

With additional reporting by Joe Tidy