UK Budget Brings Mandatory Crypto Tax Reporting From Jan 2026

The United Kingdom has confirmed that new reporting rules for cryptocurrency platforms will take effect as part of the 2025 national budget plan. These requirements mark a major effort to ensure that crypto investors accurately disclose profits to UK tax authorities.

Beginning January 1, 2026, crypto trading platforms operating in the country will be required to collect detailed information from customers about their crypto transactions — including tax reference numbers — and submit the data to HM Revenue & Customs (HMRC) the following year.

The initiative is part of the Cryptoasset Reporting Framework (CAFR), a global cooperation effort designed to increase tax transparency within the digital asset industry.

Penalties for Non-Compliance

Investors who refuse to provide the required information may face fines of up to £300. Trading platforms that fail to report customer details can also be fined £300 per unreported user, potentially leading to significant financial penalties.

HMRC will cross-check the new reporting data with filed tax returns and identify individuals who have not properly declared crypto-related gains. The UK government estimates that stronger compliance measures could generate over £315 million in additional tax revenue by April 2030 — enough to support major public spending, including healthcare staffing.

HMRC officials stress that this is not a new tax, but a stronger enforcement of existing capital gains rules. Investors are being urged to ensure they understand what information they must provide to crypto platforms.

Challenges Ahead for Crypto Platforms

Tax specialists warn that collecting and verifying detailed personal data may prove difficult for trading platforms, especially given the privacy-minded nature of many crypto users.

Exchanges will need upgraded systems to store, validate, and report accurate customer records. Any failure — including late submissions, missing information, or poor due-diligence procedures — could trigger harsh penalties from HMRC.

These operational changes are expected to be costly, and experts predict that crypto companies may eventually pass compliance expenses on to traders through higher fees.

There is also the possibility of users seeking ways to bypass regulated platforms — a pattern seen in other financial sectors when strict reporting rules were introduced.

DeFi Taxation Still Under Review

While confirming progress on CAFR, the government also released an update on how lending and staking in decentralized finance (DeFi) might be taxed in the future.

Initial guidance suggests HMRC may support a “no gain, no loss” approach — meaning taxable events would only occur once assets are converted or withdrawn, rather than during ongoing lending or liquidity-pool activity.

However, no final decision has been made, and the government plans to continue consulting industry stakeholders before setting a timeline for policy implementation.

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