UK to Generate £315 Million by 2031 with New Crypto Reporting Rules

The UK government has announced new reporting regulations targeting crypto investors, set to take effect in January 2026. The framework, introduced by His Majesty’s Revenue and Customs (HMRC), aims to curb tax evasion among crypto investors, often referred to as “crypto bros.” The government anticipates that this initiative will generate £315 million over the next five years.

Under the new regulations, crypto exchanges and service providers will be required to collect and report comprehensive personal details and transaction summaries of their users to HMRC. Failure to comply with these stringent reporting requirements could result in fines of up to £300 per user for the service providers, while investors who do not comply may also face penalties. The data to be provided includes full names, addresses, dates of birth, tax residence, National Insurance numbers, and summaries of crypto transactions. This information will be used by HMRC to ensure that crypto investors are paying the correct amount of tax on their profits.

Exchequer Secretary to the Treasury, James Murray, emphasized the government's commitment to closing the tax gap and ensuring that tax dodgers have nowhere to hide. He highlighted that the revenue raised from this crackdown will be used to fund essential public services such as healthcare and law enforcement. Jonathan Athow, director general for customer strategy and tax design at HMRC, urged crypto asset users to prepare their details in advance to avoid future penalties.

HMRC also noted that it will share the collected information with the relevant tax authorities of other countries for those using crypto exchanges outside the UK. This move aligns with global efforts to implement Crypto Asset Reporting Frameworks (CARFs), enabling tax departments worldwide to share information on digital asset investors.

In September 2024, the UK government introduced the “Property (Digital Assets) Bill,” which classified digital holdings, including crypto assets and non-fungible tokens (NFTs), as personal property under the law. This legislation provides the government with additional leverage to impose capital gains taxes on digital assets, further tightening the regulatory framework around crypto investments.