- UK-registered cryptocurrency platforms must collect and report customer personal details starting January 1, 2026.
- Collected data includes crypto transactions and tax reference numbers to support compliance with capital gains tax.
- HM Revenue & Customs (HMRC) anticipates raising $417 million in additional tax revenue by April 2030 through this reporting.
- Exchanges face compliance costs and penalties for non-reporting, which may be transferred to customers.
- The UK government is considering taxation approaches for decentralized finance activities like lending and staking.
Starting January 1, 2026, cryptocurrency trading platforms registered in the United Kingdom are required to collect personal details from their users. This move is part of the UK government’s 2025 Budget and aligns with the international agreement under the Cryptoasset Reporting Framework (CAFR), which involves cooperation with the OECD. Under this framework, cryptoasset service providers must supply HM Revenue & Customs (HMRC) with customer information, including transaction records and tax identification numbers, as detailed on the UK government website here.
Platforms must begin collecting this data for reporting in 2027. Customers who fail to provide necessary information may incur fines up to $397, while platforms face penalties of $397 per unreported customer, as outlined in the 2025 Budget document here. HMRC intends to use these reports to verify tax returns and ensure correct declaration of cryptocurrency gains. The agency projects an additional $417 million in tax revenue by April 2030, funds described in an HMRC press release here as sufficient to support over 10,000 newly-qualified nurses annually.
Compliance with these requirements presents challenges, particularly in gathering accurate tax reference numbers. Dion Seymour, the Crypto and Digital Asset Technical Director at the London law firm Andersen, highlighted the difficulties crypto platforms may face in reporting and stated, “RCASPs [reporting cryptoasset service providers] will have their work cut out for them to ensure they have all the required information”. Inadequate compliance risks substantial fines that could impact platforms financially. David Lesperance, MD of Lesperance and Associates, noted that these costs might be passed on to customers. He also mentioned the likelihood that some traders may migrate to noncompliant services initially, as reported by Decrypt.
In addition to reporting requirements, the Budget confirmed HMRC’s publication of a summary detailing responses to a consultation on taxing decentralized finance (DeFi) activities like lending and staking. The government appears inclined toward treating taxable events as realized only when cryptoassets are sold for fiat currency, adopting a “no gain, no loss” approach during lending or liquidity provision. This summary is accessible here. The final decision remains pending, with ongoing stakeholder engagement to refine the approach.
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