The new cryptoasset reporting rules are bringing more attention to an area where awareness and compliance still appear to be low. Despite HMRC’s cryptoasset disclosure service running for more than two years, it has generated just over £4 million in disclosures. That may suggest many investors still do not realise when a tax charge can arise, or what needs to be reported.
Why crypto gains are often missed
Most crypto gains are subject to capital gains tax. However, HMRC suspects that many cryptoasset investors have failed to report their gains when cryptoassets are sold or gifted.
In some cases, people may assume crypto transactions are tax free. That misunderstanding can easily happen when one type of cryptoasset is simply exchanged for another. However, that still counts as a disposal for tax purposes.
A disposal also takes place when cryptoassets are used to pay for goods or services. That can be easy to overlook, especially where cryptoassets are linked to one of the specialist Visa cards that can be used for spending around the world.
A simple example
For example, an investor might buy into a new cryptoasset using some of their Bitcoin. If that new cryptoasset then increases in value and is later converted back into Bitcoin, both transactions are treated as disposals. That means capital gains tax may be due on gains above the £3,000 annual exemption.
HMRC compliance activity
HMRC has sent out more than 100,000 letters prompting investors to disclose their cryptoasset tax liabilities. Until recently, however, it has been relatively easy for investors to avoid scrutiny by using international cryptoasset service providers that were not required to share information with HMRC.
What the new rules mean
This is where the new cryptoasset reporting rules become important. New reporting requirements came into force on 1 January 2026. They apply when a crypto investor buys, sells, transfers or exchanges cryptoassets.
Even so, the position is not fully straightforward. Several countries that host cryptoasset providers have not yet signed up to the reporting requirements. Likewise, using a decentralised exchange might still circumvent the new reporting rules.
Inheritance tax also needs to be considered
Cryptoassets can also create problems for inheritance tax. These assets form part of a deceased person’s estate, but access may not always be possible where security depends on private keys and passwords.
Where to find more help
HMRC has published detailed guidance on the new cryptoasset reporting requirements. That guidance may be useful if you are unsure how the rules apply or what information may need to be disclosed.
Cryptoassets may still feel unfamiliar to many taxpayers. However, HMRC’s attention in this area is clearly increasing. As a result, it is worth taking time to understand when a disposal happens, what needs to be reported and how the cryptoasset reporting rules may affect your position.