The new crypto tax rules investors need to prepare for now
Crypto investors are being urged to ensure they have reported any capital gains to HMRC or face fines worth hundreds of pounds amid new transparency rules being introduced next year.
Financial Conduct Authority (FCA) data suggests around 8% of UK adults, roughly 4.5 million people, now hold cryptocurrency such as Bitcoin.
But commentators warn that those who have got into it as a side-hustle or to make quick profits amid Bitcoin prices may not realise that they need to pay capital gains tax (CGT).
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HMRC has previously clamped down on those failing to pay owed CGT.
As many as 101,024 CGT warning or ‘nudge’ letters were investors in crypto assets between 2020 and 2025, according to Freedom of Information (FOI) data obtained from HMRC by comparison platform BrokerChooser.
Crypto investors will have no excuses from 2027 when platforms have to start reporting user data to HMRC.
Here is what you need to know.
Crypto tax changes explained
Owning crypto has never been tax-free and any profits from sales of the asset could result in a CGT bill if above the £3,000 threshold.
Currently investors have to report this to HMRC themselves but under the UK’s incoming Cryptoasset Reporting Framework, UK cryptoasset service providers began collecting user data in January 2026, with their first reports to HMRC due between January and May 2027.
Providers must record each user’s name, address, date of birth, tax residence and, for UK residents, their National Insurance number or Unique Taxpayer Reference.
If you give inaccurate information or do not provide details, you could get a penalty of up to £300
HMRC expects the measure to raise an extra £315 million over four years.
If you have not paid owed tax and HMRC finds out, you may get a penalty of up to 100% of the tax due plus interest.
Harvey Dhillon, chief executive of at accountancy firm Zmartly said the person caught out is not the sophisticated trader but the everyday holder or side-hustler who bought a little, sold or swapped some, and never thought to put it on a tax return.
He added: “Crypto was never untaxed. It was just unseen, and that is the only thing changing. Selling a coin, swapping one for another or being paid in crypto can trigger Capital Gains Tax or Income Tax, and always could.
“Reported to HMRC is not the same as declared by you, and the gap between the two is where the penalties live. The person caught is not the full-time trader but the everyday holder who bought a little, sold some, and assumed a small pot could never be taxable.”
How to prepare for crypto tax
Crypto prices have soared in recent years, especially if you have bought and sold Bitcoin or Ehtereum in your investment portfolio.
With the capital gains allowance frozen at £3,000, even modest disposals can be chargeable.
Dhillon added: “If you have ever sold or swapped crypto, check your history now, work out the gains for each year, and correct anything missing before the reports land. The anonymity was the only thing protecting an unpaid bill. In 2027 it goes.”
Graham Nicoll, financial planner at NCL Wealth Partners, urged people to review their transaction history.
He added: “This isn’t a new tax, but it is a significant shift in transparency. I’ve seen investors who made substantial gains during previous crypto rallies wrongly assume those profits didn’t need to be declared. As HMRC receives more data directly from crypto providers, those historic gains are likely to come under greater scrutiny.
“At the same time, investors shouldn’t overlook losses. Properly reporting capital losses now can allow them to be offset against future gains, potentially reducing tax when markets recover or from gains on other assets.
“Anyone who has bought or sold crypto should review their transaction history, calculate any gains or losses and, if necessary, correct previous tax returns before HMRC comes knocking. Good records are now just as valuable as good investment returns.”
