Taxation of Cryptocurrency in the UK: Upcoming Changes and What You Need to Know

Cryptocurrency has quickly evolved from a niche interest to a mainstream financial asset. With millions of people in the UK now holding digital currencies like Bitcoin and Ethereum, HMRC has stepped up the effort to ensure investors in Cryptocurrency are paying the correct amount of tax.

Whether you’re a casual trader, a long-term investor, or involved in crypto mining or staking, understanding your tax obligations is essential.

How Cryptocurrency is Taxed in the UK

HMRC does not consider cryptocurrency to be money or currency. Instead, crypto assets are treated as property, meaning they are subject to Capital Gains Tax (CGT) and in some cases Income Tax (IT) and National Insurance (NIC).

Capital Gains Tax (CGT)

You may be subject to CGT when you:

• Sell crypto for currency (for example GBP or USD)
• Exchange one crypto asset for another
• Use crypto to pay for goods or services
• Gifting crypto (excluding to a spouse or civil partner)

Each of these is considered a disposal, and any capital gains made may be taxable if it exceeds your CGT annual allowance.

Income Tax (IT)

You may need to pay IT and NICs if you:

• Receive crypto from your employer
• Earn crypto via mining or other methods
• Are paid in crypto for the supply of services

The amount of tax charged will depend on the nature of the activity and your overall income.

What’s Changing? HMRC’s New Crypto Reporting Rules from 2026

Starting in January 2026, HMRC will implement the Crypto asset Reporting Framework (CARF), which is a significant step towards transparency and tax compliance in the crypto space.

Under the CARF:

• Crypto exchanges must collect and report user data, including:
• Full name, address, and date of birth
• Residency and National Insurance number
• Summary of crypto transactions
• Non-compliance by users or providers could result in fines of up to £300 per user
• HMRC will use the data collected to identify individuals who have not declared taxable crypto gains.

This initiative is expected to raise up to £315 million in additional tax revenue by 2030.

It is expected that HMRC will begin to send ‘nudge letters’ to individuals identified by the changes under CARF who have not reported their crypto gains. If HMRC issue one of these letters, before you voluntarily come forward, the penalty rates applied to the CGT are likely to be higher.

How to Report Undeclared Crypto Gains

If you’ve previously failed to declare gains arising from crypto transactions, it’s not too late to come forward. HMRC offers a Crypto asset Disclosure Service, allowing individuals to voluntarily report unpaid tax.

One of the key advantages of the Crypto asset Disclosure Service is the reduction in penalties for those who voluntarily come forward. You will likely face lower penalties than if HMRC discovers the issue as part of an investigation. By coming forward voluntarily, you are taking a positive step to correct your tax affairs and reduce the impact on your finances.

Need Help? Get in Touch With Us

Navigating the rules and reporting requirements surrounding taxation of cryptocurrency can be complex, especially with evolving regulations. As experienced tax advisors, we can:

• Help you calculate and report your crypto gains
• Assist with disclosures to HMRC
• Ensure you remain compliant going forwards

Don’t risk higher penalties or legal complications. If you are looking to make a disclosure to HMRC about your crypto affairs, speak to one of our expert tax advisors today to begin the process of bringing your tax affairs up to date.