In recent years, investing and using “crypto” (cryptocurrency) has surged in popularity. The rise in what HMRC term “cryptoassets” has become a difficult thing to deal with from a tax point of view, within the current tax system.
In our work with small business owners here in the UK, we have found many of them have ‘dabbled’ at various levels with Crypto.
HM Revenue & Customs has recently announced plans to intensify efforts to combat crypto tax evasion under what it calls the Cryptoasset Reporting Framework (CARF).
Crypto and tax – what’s changing
From 1st January 2026, crypto service providers (aka platforms) will have to collect personal data on their users or face fines of up to £300 per user. They will then have to report each transaction for that user to HMRC.
This will mean HMRC will know who you are and what your crypto transactions are.
Crypto and tax – the current situation
There is no “new” tax, as crypto assets have always been charged to tax in certain circumstances. In general, when you dispose of crypto assets, any gain/profit is taxable. This is because HMRC sees crypto as an asset, not a national currency like dollar or pounds,
Crypto disposal includes any transaction that leaves you with less crypto that you had before the transaction, including:
- Selling crypto for regular currency
- Buying goods or services using crypto
- Buying other types of cryptoassets
- Giving cryptoassets away
Crypto on tax returns
If you have a tax return to complete, you will notice that there are new, separate boxes to report crypto transactions on.
This is all part of further data collection from the authorities to ensure that people are paying the correct amount of tax.
Practical steps for crypto users
To navigate HMRC’s crackdown on crypto tax evasion effectively, small business owners with crypto investments can take several proactive steps:
- Educate yourself: Stay updated on HMRC’s latest guidance regarding cryptocurrency tax. Seek professional advice if needed to ensure you don’t risk penalties.
- Information for your cryptoasset service provider/s: See this Gov website for what info you will need to give crypto platforms.
- Record transactions: Maintain detailed records of all crypto transactions. This includes transaction dates, amounts and the sterling value at the time of the transaction. Software REALLY helps here.
- Declare income: Report crypto-related income accurately on tax returns. Ensure that all profits, whether from trading, mining, or other activities are accounted for.
If you have undeclared income, a disclosure should be made to HMRC.
Crypto and tax returns – how we can help
If you are involved in crypto and are struggling with completing your tax return for transactions, we can help. Just get in touch.
Crypto Tax FAQs
What are crypto platforms?
A crypto platform is an online service where you can buy sell, swap and store your cryptoassets. Popular crypto platforms include Binance, Bybit, Kraken, Gemini, Coinbase, Crypto.com and BitMart.
What are cryptoassets?
Cryptoassets include exchange tokens, NFTs (non-fungible tokens), utility tokens, stablecoins and security tokens.
Why are the HMRC interested in crypto transactions?
Crypto is big business, with Binance clocking up 9million visitors a week, and total assets of (wait for it) $165,092,845,509. Small wonder then that HMRC have those with crypto firmly in their sights.
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About the author:
Dan Heelan is the Business Services Director of Heelan Associates, an accounting firm that helps small business owners across the UK start, survive, and grow.
With a background as a small business owner himself, he discovered his passion for accounting and tax early in his journey and now focuses on empowering fellow entrepreneurs with the knowledge and tools to navigate the financial side of running a business.
You can see and hear Dan in action in his regular: