HM Revenue & Customs (HMRC) has begun collecting full transaction data from cryptocurrency exchanges used by UK-based customers, marking a significant escalation in the enforcement of crypto tax compliance.

Already in effect (and has been since Jan 1), all major crypto exchanges dealing with UK users are now required to hand over complete records of transactions. This includes how much individuals paid for cryptoassets, how much they sold them for, and the profits generated, alongside each user’s tax residency and personal details.

Platforms must collect and report information such as full name, address, date of birth and a UK tax number, such as a National Insurance number. Penalties may apply if users fail to provide the required details or if exchanges do not report accurately.

Basically, the reckoning is upon us.

A Global Network of Crypto-data

The changes form part of a coordinated global effort to prevent the concealment of profits in cryptoassets, under the Cryptoasset Reporting Framework (CARF) developed by the OECD.

The UK is among the first 48 countries to implement the framework, with more than 75 jurisdictions signed up overall. Other territories, including Hong Kong, Singapore, the UAE and Switzerland, are expected to begin reporting in 2027, while the United States will start collecting data in 2028 and begin sharing it internationally from 2029.

HMRC is building what amounts to a direct pipeline of crypto information.

From 2027, the tax authority will automatically send and receive crypto trading data with other participating countries, including all EU member states, as well as Brazil, South Africa, the Cayman Islands and the Channel Islands. The result will – on paper anyway – be comprehensive visibility over crypto transactions linked to UK taxpayers, including activity conducted through overseas platforms.

What Will Crypto Tax Enforcement Look Like From Now On?

Cryptocurrency has been taxable in the UK for several years, but enforcement has historically relied largely on self-reporting, so the HMRC is likely justified in its belief that a substantial amount of crypto-related tax has gone unpaid, particularly during periods of sharp price movements.

Bitcoin, often viewed as a proxy for the wider crypto market, rose sharply during 2025 before falling back significantly by the end of the year (at time of writing, it’s sitting at around £69,004 per Bitcoin), leaving investors who bought at lower prices and sold at higher levels potentially liable for tax on their gains.

Individuals who have made more than £3,000 in crypto gains in the UK may be required to pay capital gains tax.

In cases where HMRC decides that trading activity is frequent or organised, it may instead be treated as a business, bringing income tax and national insurance contributions into play – the exact nuances of how this is determined isn’t clear.

Taxable disposals are not limited to selling crypto for cash, exchanging one token for another, using crypto to purchase goods or services, or gifting tokens can also trigger a tax liability, except in transfers to a spouse or civil partner.

HMRC’s enforcement activity in the crypto space has increased markedly. During the 2024-25 tax year, the department issued 65,000 warning letters to individuals suspected of owing tax on crypto transactions, up from 27,700 the previous year. A voluntary disclosure facility is available, giving taxpayers an opportunity to declare previously undeclared crypto profits before April 2024. However, truth be told, it’s best to speak to your tax advisor first if you’re not crystal clear.

For the first time, the UK self-assessment tax return now includes a dedicated section for crypto profits and losses. Anyone who made gains during the 2024-25 tax year may need to submit a return by 31 January.

HMRC estimates that there may be many thousands of crypto holders in the UK with unpaid tax liabilities and expects the new reporting regime to generate at least £300m in additional revenue over the next five years.

Recommended reading

• Comment | The Dark Side of Crypto
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• FCA to Gain More Power Over UK’s Booming Crypto Market

The reporting change isn’t the only regulatory development stirring for crypto affcianados.

The Financial Conduct Authority is running a public consultation until 12 February on proposed new rules for the sector, including standards for crypto exchanges, requirements aimed at ensuring brokers act responsibly, measures to prevent insider trading, and proposals covering crypto lending and borrowing.

While it’s been a long time coming, there’s likely to be a good deal of confusion as the new rules take hold. That’s why, again, it’s definitely worth having a chat with your tax advisor if you’ve been reasonably active in the crypto space. Or, of course, take the wait and see approach – but we don’t advise that.