HMRC is gearing up to collect detailed information from cryptocurrency platforms regarding the holdings of all UK taxpayers, encompassing personal, business, and trust accounts. This development, announced in the recent UK budget, marks a significant step in HMRC’s ongoing efforts to tighten regulations around cryptocurrency taxation.
As part of its Making Tax Digital initiative, HMRC aims to enhance tax revenue collection and minimize losses due to fraud and non-reporting. Traditionally, the reporting of profits from crypto assets under Capital Gains Tax has been voluntary; however, HMRC considers this practice insufficient in addressing what it sees as a substantial issue of tax avoidance.
Starting January 1, 2026, crypto platforms will be required to track the gains accrued by their UK customers. This information will include the purchase price, sale price, and any profits generated. In 2027, platforms will then submit this data to HMRC, allowing time for the necessary data flow and integrations to be validated. HMRC plans to cross-reference this information with self-assessment returns to verify the accuracy of taxpayers’ claims.
The data collected will also pertain to businesses and trusts, which will be compared against the tax returns they submit at the close of each reporting period. While many organizations already log their crypto activities, HMRC intends to ensure that SMEs and self-employed individuals properly report and remit tax on their profits.
On a global scale, there’s been a concerted effort among countries to address the tax implications of crypto assets. The OECD’s 2014 Standard for Automatic Exchange of Financial Account Information in Tax Matters has previously enhanced tax transparency, yet the rise of cryptocurrencies has been largely overlooked until recent years. The sudden surge in the valuation of cryptocurrencies, especially evident in the price of Bitcoin—from approximately $1,003 in January 2017 to $124,752 in July 2025—has raised concerns among tax authorities about potential losses in tax revenue.
In response to these challenges, the OECD has introduced the Crypto-Asset Reporting Framework (CARF), defining crypto assets in broad terms to include decentralized holding and transfer capabilities. This framework aims to encompass various forms of digital assets, including stablecoins and non-fungible tokens (NFTs), thereby covering a wide array of activities attributed to both individuals and businesses engaged in crypto trading.
Platforms involved in crypto exchanges will bear the responsibility of reporting under CARF, which necessitates increased due diligence measures such as enhancing anti-money laundering and customer verification processes. This shift towards accountability may trigger concerns within the crypto community, where anonymity has been a selling point.
Recent legislative shifts in the U.S. regarding cryptocurrency also signal a global trend. New laws aim to integrate crypto into recognized asset classes, with regulations being developed to govern this market more rigorously. In the EU, similar legislation has been introduced, with the Markets in Crypto-Assets (MiCA) framework setting stringent requirements for crypto-asset service providers and issuers.
As HMRC prepares for these changes, crypto holders who have benefitted from significant tax-free profits face an increasingly challenging landscape. While the precise financial impact of these changes remains uncertain, HMRC anticipates negligible effects on the Exchequer in the short term, suggesting it lacks a full understanding of current tax underreporting or evasion levels.
Research indicates that younger individuals, particularly those between the ages of 16 and 44, are overrepresented among crypto asset owners, as well as a notable male demographic. As the deadline for self-assessment tax returns approaches, individuals should be prompted to declare any unreported crypto holdings before HMRC begins to utilize CARF data, which could lead to penalties for those who fail to comply.
