Taxpayers urged to accurately declare all crypto gains and losses before January 31.
Income tax rises for Scots in April – how the changes affect you
New rules which came into force on January 1 will make it harder for crypto investors to hide their gains from international tax authorities.The Cryptoasset Reporting Framework (CARF) requires UK reporting cryptoasset service providers to collect and report information to HM Revenue and Customs (HMRC) about the tax residency of users and their transactions.
Information on non-UK users will be exchanged with other tax jurisdictions who have also implemented the CARF. In return, HMRC will receive data collected from other jurisdictions to help it tackle tax evasion and avoidance.
The tax treatment of crypto assets can be complex. However, in simple terms HMRC sees the profit or loss made on buying and selling of exchange tokens as within the charge to Capital Gains Tax (CGT).
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A disposal of a crypto asset occurs when you sell it for fiat currency, trade it for another crypto asset, spend it or gift it to someone other than a spouse or civil partner. HMRC’s guidance says only in exceptional circumstances will it accept buying and selling of crypto amounts to a trade for tax purposes.
For individuals, this means if you have sold crypto for a profit during the 2024/25 tax year, you may have reporting and tax obligations and be required to file a tax return before January 31, 2026.
For the first time this year, the Self Assessment tax return form has a dedicated section where taxpayers can declare their crypto gains and losses.
During the 2024/25 tax year, the price of some of the more popular crypto tokens recorded significant changes with Bitcoin rising by over 23 per cent when comparing the opening price on April 6, 2024 to the closing price on April 5, 2025.
Meanwhile Ethereum dropped 46 per cent in the same period.
Dawn Register, a tax dispute resolution partner at BDO said: “HMRC has been concerned for some time about high levels of non-compliance among crypto investors.
“These new rules coming into force from 1 January will give HMRC access to a much richer dataset on cryptoasset investors and their transactions. Information will be shared automatically across international borders, allowing HMRC to better target those UK tax residents it suspects of failing to correctly declare their gains.”
The tax expert continued: “Those who made crypto gains in the 2024/2025 tax year may be required to file a tax return before 31 January 2026. All gains must be accurately reported in the new dedicated section of the Self Assessment form. Investors can also report losses up to four years after the end of the tax year in which they disposed of a crypto asset.
“This can be offset against any CGT charge in the current tax year or carried forward to future years.”
Ms Register added: “HMRC is also looking to encourage voluntary disclosure where people have unpaid tax in earlier years and want to correct their affairs. HMRC is running a disclosure facility where taxpayers can come clean on undeclared gains and unpaid tax prior to April 2024. Specialist tax advice and assistance should be sought where this is applicable.
“Another area where cryptoassets pose challenges for taxpayers is inheritance tax. HMRC requires that all cryptoassets are included in an IHT return, the form IHT400, as they are considered part of the deceased’s estate for tax purposes. Cryptoassets must be valued at their fair market value in pound sterling on the date of death.
“Due to the volatile nature of crypto markets, professional advice may be needed for an accurate valuation. Access can also be a problem for executors or administrators as they must gather comprehensive documentation to report it correctly, yet crypto is often secured by private keys and passwords.”
HMRC has published some helpful guidance on GOV.UK on how to report capital gains on your Self Assessment tax return – see Help with Capital Gains on your Self Assessment tax return – GOV.UK.
