HMRC’s cryptoasset disclosure service has generated over £4 million in disclosures. After two years of operation, this could be viewed as a low level of compliance and awareness surrounding crypoassets and their tax obligations.
HMRC suspects that many investors in cryptoassets are failing to report their gains when sold or gifted, signalling non-compliance with Capital Gains Tax requirements. This may suggest that people are viewing crypto transactions as tax-free, especially if it is simply the case of exchanging one type of cryptoasset for another. In addition to this, there is also a disposal if cryptoassets are used to pay for goods or services; easy to do when cryptoassets are added to one of the specialised Visa cards, which can be used to spend anywhere in the world.
For example, an investor buys into a new cryptoasset using some of their Bitcoin. The new cryptoasset increases in value, so the investor converts back to Bitcoin. Both transactions are disposals, so CGT is due on gains in excess of the £3,000 exemption.
HMRC Compliance Letters Distributed
HMRC has sent out over 100,000 letters prompting investors to disclose their cryptoasset tax liabilities. However, it has, until recently, been quite easy for investors to avoid scrutiny by using international cryptoasset service providers, which were not required to share any information with HMRC.
New reporting requirements came into force on 1 January 2026. These apply when a crypto investor buys, sells, transfers or exchanges cryptoassets, although several countries that host providers have not yet signed up to the reporting requirements. Likewise, using a decentralised exchange might circumvent the new reporting rules.
Cryptoassets also pose a problem for inheritance tax (IHT). The assets form part of a deceased’s estate, but access may not be possible when security involves private keys and passwords.
HMRC’s detailed guidance on the new cryptoasset reporting requirements can be found here.
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