Do I need to report crypto assets on my Tax Return?

Holding crypto assets, and trading in crypto currency, have become much more mainstream activities in recent years. Increased scrutiny by HMRC and a new tax reporting framework means that in the future these transactions will need to be included on tax returns.

Crypto assets are an increasingly popular type of investment with 10% of people in the UK holding one in some form. Given their digital nature, most people aren’t aware that – just like traditional investments – if they create a profit on disposal then they should be reported to the tax authorities. This is likely to become even more of an issue as more people acquire and trade in crypto assets.

Changing rules

Crypto assets are receiving more attention from HMRC, and new rules will tighten up how any profits should be declared. Until now, HMRC has dealt with any non-disclosures on case by case basis. But a new consultation means that they are becoming more of an area of focus, and in the future will need to be declared on tax returns.

Until now any gains relating to crypto assets could be disclosed using the “other property, assets and gains” section of the Tax Return, with the guidance notes advising that you should “check if you need to pay tax when you sell crypto assets”. This may have slipped past many who are completing returns. However the recent Spring Budget announced a new consultation, which means that full disclosure will likely come into force for 2024/25 tax returns.

Increased focus

Increased scrutiny has become much simpler since the Common Reporting Standard (CRS) was introduced. This allows automatic exchange of information between over 100 tax authorities, including the UK. The CRS has now been expanded to include digital financial products. And new legislation – the crypto asset reporting framework (CARF) will build on these powers giving HMRC and other tax authorities access to information relating to crypto asset transactions. Rules come into force in a couple of years in 2026, with information exchanges beginning in 2027.

Check your disposals of crypto assets

If you hold any crypto assets it’s important to understand and acknowledge that they have tax implications. This is especially relevant given HMRC’s increasing interest in these investments and their expanding information powers.

If you’ve traded in any form of crypto asset, it’s worth noting that these transactions are not invisible and are likely to become a standard aspect of any tax return. As a result it will be important to keep any records of your crypto assets transactions.