The UK government has confirmed that a major shift in crypto tax reporting will take effect from January 1, marking the start of a stricter oversight regime for trading platforms and investors. The update, outlined in the 2025 Budget, will require UK-registered crypto exchanges to collect personal information from their customers and relay it to HM Revenue & Customs (HMRC) as part of the global Cryptoasset Reporting Framework (CAFR). The measure, developed in partnership with the OECD, aims to tighten compliance with existing capital gains tax laws rather than introduce any new tax on digital assets.
Under the new rules, platforms must gather details such as tax reference numbers and records of crypto transactions. The first batch of information collected in 2026 will be submitted to HMRC the following year. Investors who refuse to provide their information to exchanges could face fines of up to £300, while exchanges themselves may be penalised the same amount for each unreported customer. HMRC plans to use the collected data to cross-check tax filings and identify traders who may have understated or failed to disclose their crypto-related profits. The government estimates that the enhanced reporting system could generate an additional £315 million in tax revenue by April 2030, an amount the agency said would be enough to pay more than 10,000 newly qualified nurses for a year.
While the policy aims to close tax gaps, experts believe the rollout will introduce operational hurdles. Dion Seymour of Andersen noted that many crypto traders may be reluctant to share sensitive information such as tax identification numbers, making it challenging for reporting cryptoasset service providers to meet their obligations. He added that exchanges will need robust systems for data collection, storage, and submission, and that lapses could result in heavy fines for issues ranging from inaccurate reporting to failures in due diligence and record keeping.
The costs associated with meeting these obligations may eventually fall on users. David Lesperance of Lesperance and Associates argued that the extra compliance burden will likely push exchanges to increase their fees. He also warned that some traders seeking to avoid scrutiny may migrate to offshore or non-compliant platforms, though he predicts such avenues will shrink over time as more countries adopt coordinated reporting standards similar to the Common Reporting Standard and the U.S. FATCA rules.
Alongside the new reporting rules, the Budget also confirmed progress on the government’s long-running review of decentralised finance taxation. HMRC released a summary of public feedback indicating support for recognising taxable events only when gains are realised, rather than at the moment tokens are lent or staked. Although the government has not locked in its final position, officials say consultations with industry players will continue as they look to refine a workable framework.
