Key Takeaways
- The U.K. is adopting a new Crypto Asset Reporting Framework.
- From January 2026, investors must provide their tax identification number to exchanges.
- Traders who fail to register their tax details properly will face fines of up to £300.
Under new Treasury rules, crypto traders and investors in the U.K. who fail to provide accurate information to exchanges will face a fine of up to £300.
The government’s Crypto Asset Reporting Framework is designed to prevent tax avoidance by helping Her Majesty’s Revenue and Customs (HMRC) monitor people’s crypto profits.
Visit Our Secure Partners
Taxing Crypto Profits
Commenting on the penalty regime, which will enter into force in January 2026, Exchequer Secretary to the Treasury James Murray said:
“We’re going further and faster to crack down on tax dodgers as we close the tax gap.”
“By ensuring everyone pays their fair share, the new crypto reporting rules will make sure tax dodgers have nowhere to hide, helping raise the revenue needed to fund our nurses, police and other vital public services,” Murray added.
Profits on cryptocurrency investments in the U.K. are subject to capital gains tax of up to 20%.
However, HMRC research has uncovered significant gaps in crypto owners’ understanding of their tax liabilities and reporting requirements.
A Global Initiative
The U.K. Treasury’s Crypto Asset Reporting Framework builds on recommendations from the Organization for Economic Co-operation and Development (OECD).
Published in 2022, the OECD guidance establishes reporting standards for international tax compliance.
While investors who skirt the rules will be subject to penalties, enforcement of the new standards will be up to platforms.
Alongside crypto exchanges, some wallet operators and brokers will also be required to report information to tax authorities.
The U.K. government estimates that the new regime will raise up to £315 million by April 2030 by increasing transparency and improving HMRC’s ability to track crypto gains.
Enforcing Know-Your-Customer Rules
Under anti-money laundering (AML) regulations, crypto exchanges operating in the U.K. already have to collect identifying information such as customers’ names and dates of birth.
This process, known as Know-Your-Customer (KYC), has drastically altered the landscape of crypto trading in the country.
U.K. residents still have access to non-KYC exchanges, such as peer-to-peer ones. But it is almost impossible (and most likely illegal) to off-ramp into GBP without proof of identity.
Until now, KYC requirements have mostly been oriented toward AML. However, under the new reporting framework, crypto exchanges will also have to collect users’ tax numbers.
Any platform that fails to maintain accurate records about transactions and tax reference numbers will also face fines.
Visit Our Secure Partners
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
