Anyone buying cryptoassets in the UK will now need to provide certain identifying details to their provider as HMRC tries to boost tax revenue from the crypto sector. Under new rules that came into effect on 1st January 2026, users may face penalties for failing to share accurate personal information that can link their crypto account to their tax record. This is because cryptoasset service providers are now required to collect user data and report it to HMRC to ensure the correct amount of tax is paid.
These new rules are designed to make it more difficult for crypto investors to avoid paying Capital Gains Tax (CGT) on their trading gains and form part of a move to bring tougher regulation into the crypto sector. Historically, HMRC has struggled to collect the tax owed by investors who have bought their cryptoassets low and sold high. It is hoped the changes could help bring in at least £300m in additional tax revenue over the next five years.
Dawn Register, tax dispute resolution partner at accountancy firm BDO, said "These new rules coming into force from 1 January will give HMRC access to a much richer dataset on crypto asset investors and their transactions".
What details will crypto investors need to share?
Investors will need to provide certain identifying details to any service provider they use to buy, sell, transfer or exchange cryptoassets. This information is then used to link a user's crypto account to their tax record, making it easier for HMRC to ensure everyone pays the tax they owe.
Users will need to provide their:
- full name
- date of birth
- address and country where they normally live
- National Insurance number, Unique Taxpayer Reference (UTR) or other tax identification number
These rules will apply to all providers that allow users to buy, sell, transfer or exchange cryptoassets, or do so on their behalf. It will cover all cryptoassets, not just cryptocurrencies.
Why have the new rules been introduced?
The new rules are part of the Cryptoasset Reporting Framework (CARF), a multinational agreement designed to share information across borders. HMRC will receive information on UK-based crypto investors who have used platforms in other CARF-compliant countries, while non-UK investors using UK-based platforms will have their details exchanged with jurisdictions that have also implemented the CARF.
These tightened regulations are designed to make it harder for investors to use cryptocurrency trading as a means to avoid declaring capital gains. The decentralised nature of cryptoassets, combined with a long-standing lack of regulation in the sector, has made it challenging for HMRC and other nations’ tax authorities to effectively collect tax owed.
Do you need to pay tax on crypto?
You may need to pay tax on your crypto holdings. Crypto assets are subject to CGT when they are ‘disposed’ of, which includes selling them, spending them, exchanging them, and even giving them away (unless it is to a spouse, civil partner or a charity). If you have made a profit once you dispose of your crypto, you may have to pay a percentage of that amount in tax.
Like with income tax, there is a tax-free allowance for CGT. Currently, this stands at £3,000. If your total gains from taxable investments are less than £3,000, you won’t pay any tax. If your gains exceed £3,000, you will need to complete a tax return and pay CGT.
You can offset gains against losses to pay less tax. Investors can report losses up to four years after the end of the tax year in which they disposed of the asset. This loss can then be deducted from your taxable gains. We go into more detail on how CGT applies to crypto in our article ‘Crypto Capital Gains Tax explained: How to maximise your returns’.
Investors who now realise they should have paid CGT on crypto gains in past tax years can still report their profits to HMRC through its voluntary disclosure scheme. This applies to gains made before April 2024, as the self-assessment deadline for the 2024/25 tax year is not until 31st January 2026.
Can you invest in cryptocurrency without paying tax?
You can invest in crypto without paying tax. This could be by gradually disposing of your holdings to ensure you fall within your CGT tax-free allowance of £3,000, or by offsetting your gains against other eligible losses.
Alternatively, you could invest in crypto ETNs (exchange-traded notes), also called cETNs, held in an ISA. HMRC decided back in October 2025 - when crypto ETNs were first approved by the Financial Conduct Authority (FCA) - that cETNs can be held in stocks and shares ISAs. However, this will only be possible until the end of the tax year, from which point they can only be held in an Innovative Finance ISA.
HRMC said: "Initially, cETNs will be automatically eligible for inclusion in stocks and shares ISAs. From 6 April 2026, they will be reclassified as qualifying investments within the Innovative Finance ISA (IFISA)."
It is not clear why HMRC took the decision to adopt these rules, but it does mean that investors can take advantage of the tax-free ISA wrapper to invest in crypto. Of course, an ETN is not exactly the same as owning an asset, and you can learn more by reading our article ‘Which investment platforms offer Crypto ETNs?’.
Keep in mind that HMRC did not set in stone that the ISA tax protections will not switch back to the stocks and shares ISA in the long term. It said: "The government will keep the inclusion of cETNs in tax-advantaged accounts under review with a view to including them in the stocks and shares ISA at a later date as the market matures and as consumer understanding deepens."
ISA rules moving back and forth could be bad news for crypto investors looking to minimise CGT, as moving from one type of ISA to another could involve disposing of crypto assets and potentially paying CGT.
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