UK budget confirms new crypto reporting rules starting 1st of January
The UK government has confirmed that new reporting requirements for cryptocurrency traders will take effect on 1st of January, as part of its 2025 Budget. The changes are expected to generate an additional $417 million in tax revenue by April 2030, as UK-registered crypto exchanges will be required to collect personal information from their customers.
The new rules fall under the Cryptoasset Reporting Framework (CAFR), an international standard developed with the OECD. Under this framework, crypto service providers must give HM Revenue & Customs (HMRC) detailed information on their users, including transaction histories and tax reference numbers.
According to the Budget, data for the first reports must be collected from 1st of January 2026, with exchanges submitting this information to HMRC in 2027. Traders who fail to provide the required details could face fines of up to £300 ($397), while exchanges may also be fined £300 per customer they fail to report.
HMRC plans to use the collected information to verify tax returns and identify individuals who have not properly declared their crypto gains. The agency estimates that better reporting compliance will bring in up to £315 million ($417.3 million) over the next five years.
Officials have stressed that these rules do not introduce a new tax on crypto investments; rather, they ensure that existing capital gains tax requirements are properly followed. Regulators are urging investors to familiarize themselves with the information they will need to supply to their crypto providers.
Compliance challenges for exchanges
Tax specialists say the new reporting obligations may be difficult for exchanges to implement. Collecting sensitive details such as tax reference numbers could be complicated, especially because many crypto users are reluctant to share this information.
Crypto platforms will need robust systems to gather and store customer data, and failures in due diligence—such as incomplete reporting, missing certifications, or improper record-keeping—could lead to substantial penalties. As a result, compliance is expected to be costly for exchanges, and experts warn that these costs will likely be passed on to users.
Some analysts also predict that stricter reporting rules will push certain traders toward noncompliant or offshore platforms. Similar behavior has been seen in the banking and brokerage sectors when new transparency requirements were introduced. However, many expect that over time more countries will adopt similar frameworks, eventually creating a global standard similar to the Common Reporting Standard or the US FATCA regime.
Lending and staking tax guidance
The Budget also coincides with HMRC publishing a summary of its consultation on the taxation of decentralized finance (DeFi) activities, specifically lending and staking. The government appears to be leaning toward an approach in which tax is triggered only when gains are actually realized—for example, when crypto assets are sold for fiat currency.
This would align DeFi taxation with long-established principles of capital gains tax. However, no final decision has been made, and there is currently no set timeline for a definitive policy. HMRC will continue working with industry stakeholders to refine its approach.
