Key Takeaways
The U.K. Self Assessment tax deadline for the 2024-2025 tax year is Friday, Jan. 31, 2025.
Failure to submit tax returns by this date can result in significant penalties.
New reporting rules affect crypto investors as Bitcoin’s surge increases capital gains tax liabilities. Tax laws have changed, and HMRC is scrutinizing investors more closely.
For late submissions, an initial fine of £100 is due, with additional daily penalties if the return remains unfiled for three months or more.
After three months, late submissions will bring a daily penalty of £10, up to a maximum of £900. This means that even if taxpayers don’t owe taxes, delays in submitting returns can still result in significant fines.
After recent changes to the tax laws introduced by the new U.K. budget, investors, particularly those holding cryptocurrencies, should be aware of the rising complexity of accurately reporting their investments and associated profits.
In the October budget announcement , the Chancellor confirmed an increase in the rate paid by basic-rate taxpayers from 10% to 18% and for higher-rate taxpayers from 20% to 24%.
Bitcoin has recently surged to an all-time high, directly impacting the capital gains tax (CGT) owed by investors in the U.K. Capital gains tax is levied on the profit from selling assets like Bitcoin.
As Bitcoin’s price increases, any profits from selling or disposing of the cryptocurrency will be taxed at higher rates, significantly increasing investors’ CGT liability .
Bitcoin’s surge past $100,000 has prompted warnings to crypto investors about potential tax liabilities. HMRC has been tightening its scrutiny of crypto profits, sending ‘nudge letters’ to those suspected of not declaring gains.
The letters warn that additional taxes, interest, or penalties of up to 100% of the tax due may apply if profits are undisclosed.
According to experts , many crypto investors may not realize they need to declare their profits, especially as self-assessment filings become mandatory for many who previously had PAYE taxes.
Investors will pay taxes on capital gains from crypto exceeding the £6,000 tax-free allowance for the 2023-2024 tax year at rates of 10% or 20%.
Any additional income from crypto above the £12,570 personal allowance will be taxed between 20% and 45%. This depends on the specific transaction, applicable tax, and Income Tax band.
The capital gains tax-free allowance for the 2024-2025 financial year will decrease from £6,000 to £3,000.
The U.K. government is increasingly scrutinizing cryptoassets as their popularity grows. HMRC’s 2021 Cryptoassets Manual outlined how general tax rules apply to crypto, with capital gains tax applying when investors dispose of crypto, even through exchanges or giveaways.
Furthermore, in 2024, the HMRC updated the Self-Assessment tax return to require separate reporting of crypto transactions. HMRC also launched a voluntary disclosure facility for crypto investors.
Further, the U.K. government is implementing the OECD’s Crypto-Asset Reporting Framework (CARF) to improve reporting and data sharing between jurisdictions.
Starting in 2026, crypto service providers will need to collect and report user data, with penalties for non-compliance. The challenge for HMRC lies in managing and acting on the vast amount of data on crypto investors.