UK Crypto Investors Face Stricter Oversight as HMRC Enforces Automatic Data Sharing

Effective January 1, cryptocurrency investors in the United Kingdom are subject to stringent new disclosure requirements, mandating the sharing of account details with tax authorities or facing potential penalties.

The initiative, spearheaded by HM Revenue and Customs (HMRC), is designed to ensure full compliance regarding taxes on the buying and selling of digital assets, specifically Capital Gains Tax. In a move to recover tens of millions of pounds in unpaid revenue, HMRC has commenced the automatic collection of user data from cryptocurrency exchanges, effectively treating these platforms with the same reporting standards applied to traditional banks.

This fiscal tightening coincides with broader regulatory scrutiny, as the Financial Conduct Authority (FCA) continues consultations on robust industry standards, including measures to combat insider trading.

Volatility and Tax Liability

The regulatory crackdown follows a volatile year for the crypto market. Bitcoin, widely regarded as the industry’s bellwether, began 2025 trading at approximately $93,500 (£69,500). It rallied to a peak of nearly $124,500 before retreating to end the year below the $90,000 mark.

Investors who capitalized on these fluctuations by buying low and selling high are liable for taxes, yet collection has historically proven challenging for the Exchequer.

“HMRC has been concerned for some time about high levels of non-compliance among crypto investors,” says Dawn Register, a partner in tax dispute resolution at the accountancy firm BDO. She notes that the implementation of these new rules will make it significantly more difficult for wealthy crypto investors to conceal untaxed gains, as tax authorities will now possess comprehensive data on users and their transaction histories.

Under the new regime, crypto exchanges—which facilitate the conversion of fiat currency into digital coins—must automatically provide accurate, up-to-date accounts of their users’ earnings. Platforms that fail to comply risk facing financial penalties.

Global Cooperation and Revenue Targets

The UK’s measures are part of the broader Cryptoasset Reporting Framework (CARF), which is being rolled out across dozens of nations. This standardization is expected to streamline international cooperation, allowing tax authorities globally to share financial data more easily.

HMRC estimates that thousands of UK crypto owners currently hold unpaid tax bills. Officials project that the enhanced oversight will generate at least £300m in revenue over the next five years.

For investors, the immediate priority is the upcoming tax deadline. Ms. Register warns that anyone who realized crypto gains during the 2024-25 financial year may need to file a tax return by January 31, utilizing a new, dedicated section within the self-assessment form.

“HMRC is also looking to encourage voluntary disclosure where people have unpaid tax in earlier years and want to correct their affairs,” Register adds. She notes that a disclosure facility is currently in operation, allowing taxpayers to declare gains and pay taxes owed from periods prior to April 2024.

FCA Consultation Continues

While HMRC focuses on revenue, the FCA is advancing its regulatory framework for market conduct. A public consultation is open until February 12 regarding proposed rules that cover standards for exchanges, responsible conduct for brokers, and regulations governing crypto lending and borrowing.

David Geale, the FCA’s executive director for payments and digital finance, commented last month on the consultation, signalling that regulation is inevitable.

“Our goal is to have a regime that protects consumers, supports innovation and promotes trust,” Geale said. “We welcome feedback to help us finalise these rules.”