UK crypto users must disclose account details to HMRC under the Cryptoasset Reporting Framework (CARF) or face penalties, with the aim of ensuring taxation on buying, selling, and capital gains and recovering unpaid tax that could amount to tens of millions.

Crypto exchanges are treated like banks for tax purposes, serving as the primary source of information on users’ transactions and earnings, with penalties for non-compliance.

CARF regulations are being rolled out to enhance information sharing across borders and with tax authorities in other countries, and from January 1 they require exchanges to automatically share up-to-date earnings data.

Bitcoin price movements in 2025 are cited to illustrate market activity and potential tax implications for gains and losses.

Investors who earned crypto gains in the 2024-25 financial year may need to file a tax return by January 31 via a new section of the self-assessment form, with voluntary disclosure programs available for undeclared gains and earlier unpaid taxes.

The Financial Conduct Authority is consulting on broader crypto rules, including exchange standards, responsible broker conduct, and lending/borrowing regulations, with a public feedback period open until February 12.

HMRC will automatically collect information from crypto exchanges, treating them as industry banks, to identify and recover unpaid taxes on crypto trading.

Experts say these measures aim to curb non-compliance and increase transparency around crypto gains while regulators balance consumer protection with innovation and trust.