The UK government has confirmed in the 2025 Budget that new tax reporting rules for digital asset traders will come into force on 1 January 2026. The announcement, made by Chancellor Rachel Reeves on 26 November, formalises a framework originally proposed by HM Revenue & Customs (HMRC) in May and marks one of the most significant expansions of tax transparency in the digital asset sector to date.
The plan aligns the UK with the OECD’s Cryptoasset Reporting Framework (CARF), a global initiative designed to standardise how countries share information on cryptocurrency transactions to combat tax evasion. CARF requires jurisdictions to collect verified user data and exchange it with tax authorities in other member states, similar to the automatic information-sharing system already used for offshore bank accounts.
What Digital Asset Firms Must Collect
From January 2026, all digital asset companies operating in the UK must begin collecting granular personal information from both individual and business users. Required data includes full name, date of birth, home address, country of residence, legal business name and main business address. HMRC says firms will also be required to carry out due diligence to confirm that the information provided is accurate and complete, and further technical guidance will be issued.
Mandatory Reporting to HMRC in 2027
Crypto firms must submit the collected information to HMRC in 2027. The tax authority will then use the data to cross-check tax returns and identify individuals who may have failed to declare digital asset gains. HMRC warned that companies which submit incomplete, inaccurate, or unverified data could face penalties of up to £300 per user.
Revenue Projections and Public Messaging
According to HMRC’s own figures, the new rules are expected to raise £315 million in additional tax revenue by April 2030—an amount the department said would be equivalent to funding more than 10,000 newly qualified nurses for a year. HMRC Director General Jonathan Athow urged crypto users to prepare for the new requirements, noting that the rules will help ensure tax reporting is correct and consistent across the sector.
A Key Step in the UK’s Digital Asset Strategy
The UK’s implementation of CARF forms part of a wider effort to modernise financial regulation and position the country as a leading digital asset hub. The government has repeatedly signalled its intention to balance innovation with strong consumer protection—particularly after volatile market conditions and several international exchange collapses in recent years increased pressure on regulators to act.
Draft Digital Asset Framework Moves Forward
In April, the Treasury released a draft digital asset regulatory framework signalling deeper alignment between the UK and the United States on digital innovation. The draft, while light on technical detail, confirmed that digital asset exchanges, brokers, dealers and custodians will be brought under the existing UK financial services regime. Firms serving UK residents will face strict rules on transparency, consumer protection and operational resilience, mirroring the standards applied to traditional financial institutions.
Regulatory Timetable and Future Framework
The government plans to finalise the regulatory legislation by the end of this year. The framework will build on the Treasury’s February 2023 consultation on the UK’s future crypto regime, which recommended folding digital assets into the existing financial framework while creating bespoke rules for areas such as crypto lending and borrowing. The reforms are intended to provide clearer market structure while enabling innovation in tokenisation, blockchain services and digital payments.
UK Pushes Toward a Digital Currency Era
The measures come as the UK continues exploring a potential digital pound, with the Bank of England and Treasury assessing design options for a central bank digital currency. Meanwhile, increased HMRC scrutiny follows rising retail crypto activity and concerns that undeclared crypto profits are contributing to widening tax gaps. Industry groups say clearer rules could help legitimise the UK’s digital asset market, though some crypto firms warn that compliance costs may challenge smaller platforms.
