The United Kingdom is preparing to implement new tax rules on cryptocurrencies, starting January 2026, which will require cryptocurrency holders to disclose details to service providers, or face fines and possibly imprisonment.

Details of the new tax rules

These rules aim to enhance tax compliance, in addition to generating significant revenue, which will affect all cryptocurrency transactions conducted in the UK and may change market dynamics.

On the other hand, the stakeholders will include the HMRC tax authority and the British Treasury, and cryptocurrency holders will be required to provide details to service providers. Non-compliance may lead to fines or additional penalties.

Non-compliance penalties

These regulations will primarily affect cryptocurrency holders and service providers in the UK. Non-compliance may result in fines of up to £300, while severe cases may incur larger fines or imprisonment.

Experts also expect an increase in tax revenue, potentially up to £315 million to fund public services. Compliance efforts focus on the largest trading platforms like Coinbase and Binance.

Previous efforts and future expectations

Efforts to collect similar data began in 2021, with HMRC collaborating with platforms compliant with Know Your Customer (KYC) requirements. Previous tax laws penalized inflated or incomplete reports with financial penalties and legal actions.

Experts indicate that these rules may encourage improved tax disclosure practices, amidst ongoing concerns about privacy and compliance burdens for cryptocurrency users.

In turn, Jonathan Athow, the General Director for Customer Strategy and Tax Design at HMRC, commented:

“It is important to emphasize that this is not a new tax. If you gain from selling, exchanging, or transferring your cryptocurrencies, you may already owe tax. However, these new disclosure requirements will provide us with the necessary information to help individuals properly manage their tax affairs.
And I urge all digital asset users to review the details they will need to provide to the service provider, as taking action now and having this information will help you avoid penalties in the future.”

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