HMRC Issues Fresh Warning to Cryptocurrency Holders: Declare Gains or Face Penalties

📢 HMRC Issues Fresh Warning to Cryptocurrency Holders: Declare Gains or Face Penalties

As HMRC ramps up efforts to tighten compliance around cryptoassets, individuals holding or trading cryptocurrencies must be aware of their tax obligations, even when no traditional sale has occurred.

Whether you are an investor, a miner, or someone receiving crypto as income, HMRC is warning that crypto transactions can trigger a tax liability—even if the asset has been held for years.

🔍 What Does HMRC Consider a Taxable Disposal?

Most people assume they only owe tax when crypto is sold for traditional (fiat) currency. HMRC has made it clear that a disposal occurs in several other scenarios, including:

• Selling crypto for profit (Capital Gains Tax)

• Exchanging one token for another (e.g., Bitcoin to Ethereum)

• Using tokens to buy goods or services (like online purchases)

• Giving crypto away (excluding gifts to a spouse or civil partner)

Each of these actions may lead to a Capital Gains Tax (CGT) liability if your gains exceed the annual exemption—currently £3,000 from April 2024 (£6,000 in 2023/24).

📑 New Crypto Reporting Section on Self Assessment Returns

From the 2024–25 tax year, HMRC will include a dedicated section on self assessment tax returns for cryptoassets. Taxpayers will be required to report:

• Type of token (e.g., Bitcoin, Ethereum)

• Date acquired (bought or received)

• Number of tokens

• Value in pounds sterling at the time of acquisition/disposal

🧾 Record Keeping is Critical

HMRC expects full documentation for each transaction. This includes:

• Bank statements for relevant periods

• Records of crypto wallet addresses

• Details of each crypto acquisition and disposal

• Market value of crypto at the time of transaction

🛑 Important: Crypto platforms do not deduct or collect Capital Gains Tax. It is the taxpayer’s responsibility to declare and pay.

Additionally, HMRC can launch an enquiry reaching back up to 20 years, so it is essential that records are kept permanently.

💡 What If You Mined Crypto or Were Paid in Tokens?

HMRC treats income from mining as miscellaneous income, and it must be reported as such on your self assessment return. This also applies to income earned by receiving crypto payments for services or employment.

🔍 Paid in Crypto? Watch Out for Dual Tax

If you are paid in cryptocurrency, you may face two separate tax charges:

1. Income Tax and National Insurance Contributions – these should be deducted by your employer through PAYE. If not, you are personally liable.

2. Capital Gains Tax – applies if you later sell the crypto for a profit exceeding the CGT allowance.

Even if tax was paid at the time of receipt, subsequent profits on disposal may still be taxable.

📬 HMRC Crackdown Already Underway

Last year, HMRC began sending compliance letters to crypto investors and workers paid in crypto who had not declared their gains. Some recipients were required to respond within 60 days.

If you believe you have undeclared crypto income or gains from past years, you can use HMRC’s Digital Disclosure Service to come forward—but expect penalties and interest to be applied.

🔮 What’s Coming Next?

From 2026, crypto platforms may be required to automatically report transaction data to HMRC, as already happens with platforms like eBay, Etsy, and Vinted. This is part of wider global efforts to enforce tax transparency in digital assets.

✅ What Should Crypto Holders Do Now?

1. Keep detailed records of every crypto transaction.

2. Track the sterling value of tokens at both acquisition and disposal.

3. Declare any mined or received crypto as income.

4. Seek professional advice if you are unsure about your tax position.

5. Do not ignore a letter from HMRC—early disclosure can significantly reduce penalties.

Need Help Reporting Crypto Gains or Income?

At Barnett & Co Accountants, we support individuals and businesses in navigating the complexities of cryptocurrency tax compliance. From capital gains calculations to self assessment filings, we ensure your tax affairs are fully compliant and up to date.

📍 Electra House, Electra Way, Crewe, CW1 6GL
📧 info@barnettandco.uk
📞 0345 646 1516
📱 WhatsApp: 07867770009

💼 Avoid costly surprises—speak to a crypto tax specialist today.

Check if you need to pay tax when you receive cryptoassets – GOV.UK