HMRC has begun clamping down on new tax reporting rules covering cryptocurrency gains. As part of a steady push over the last 12 months it’s become clear that any crypto gains would see greater attention from the tax authorities. In 2024/25 it’s also likely that crypto assets will need to be fully declared for the first time on Tax Returns.
In a new move HMRC has begun contacting people in the UK who it suspects haven’t paid the correct amount of tax on their cryptocurrency gains. Those who have received a letter will have disposed of crypto assets, most likely by exchanging cryptocurrencies or using them for purchases. These letters advise that interest on late payments, and penalties, may be charged if an assessment discovers that additional tax is owed on any undisclosed crypto gains.
With more and more people now trading in cryptocurrency, HMRC has ramped up how it classes any gains in this area. Cryptocurrency has been subject to growing scrutiny especially given there are fears that up to 95% of those with crypto gains could be avoiding tax. Profits or losses from buying and selling cryptocurrency are handled in the same way as capital gains – with relevant taxes applying. With the capital gains tax allowance falling significantly in recent years (it’s now just £3,000) more people using crypto are likely to be liable. And if HMRC believes cryptocurrency is being used for trading, then income tax and national insurance could also apply.
It’s clear that regulation and legislation in this area is only increasing. HMRC is already collecting information about transactions from crypto platforms and has access to increasing amounts of cryptocurrency data. This will become an automatic feed under the Crypto Asset Reporting Framework in 2026. There have also been new disclosure processes introduced to ensure that crypto owners report any unpaid tax on their crypto assets.
If you do use cryptocurrency, it’s important to keep accurate records of your transactions and report them on your self-assessment Tax Return.