Crypto reporting on tax returns overhauled

HMRC plans to increase their checks on crypto asset reporting in self-assessment tax returns by
requiring separate reports of gains and income.

The government is introducing changes to self assessment tax return forms requiring amounts in
respect of cryptoassets to be identified separately. The changes will come into effect on the 2024-
2025 tax return forms.

HMRC has announced that there will be greater scrutiny on the reporting of all crypto transactions,
including cryptocurrencies and non fungible tokens (NFTs). All crypto sales will need to be
separately identified on UK tax returns from April 2024.

HMRC is able to check your annual tax reporting against the data they receive directly from crypto
exchanges and other trading platforms.

For the last couple of years HMRC have obtained the contact details of those trading in crypto assets
on the main crypto exchanges like Coinbase, Binance or Kraken. Under UK regulations, to have UK
customers, these exchanges are expected to disclose user data to HMRC.

Where data is shared with HMRC and you do not report your crypto sales, HMRC are likely to
contact you with a “nudge letter” to prompt you to disclose. If there is tax to pay, the penalties will
be much larger (up to 200%) if HMRC get in touch with you first, so it is always better to bring any
historic reporting to their attention first.

The rule change also affects crypto investors who have not accessed their cryptoassets. UK tax
charges and tax report can still arise even if you don’t withdraw the funds. For instance, transferring
one crypto asset or currency to another is a disposal under UK tax rules.

From 2024-2025 cryptoassests will be separated out on the capital gains pages of the self-
assessment forms and the CGT annual exempt will be reduced to £3000 in the same period from the
more generous £12,300 exemption.

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