The United Kingdom is taking a significant step toward crypto tax transparency with the introduction of stringent new reporting requirements. Starting from 1 January 2026, cryptocurrency firms operating in the UK—or serving UK-based users—will be required to collect and report extensive personal and transaction data. This move aligns with the OECD’s Cryptoasset Reporting Framework (CARF) and reflects the UK’s commitment to global financial transparency standards.

Comprehensive Data Reporting Requirements

Under the new framework, crypto companies must gather and report detailed information on both individual and business users. For individuals, this includes the full name, date of birth, home address, country of residence, and a tax reference number. UK residents must provide their National Insurance number or Unique Taxpayer Reference (UTR), while non-residents must submit their Tax Identification Number (TIN) and the country of issuance.

For businesses, the requirements extend to the registered name, primary address, and company registration number for UK entities. Foreign firms must also provide their TIN and country of issue. Additionally, platforms may be required to record information on controlling persons associated with corporate accounts.

Transactions must be logged in detail, including the cryptoasset type, transaction type (buy, sell, swap, etc.), quantity, and value. These records must be accurate, verifiable, and ready for submission to HM Revenue & Customs (HMRC).

Penalties for Non-Compliance

HMRC has made it clear that errors or incomplete reports will not be tolerated. Firms that fail to comply accurately could face penalties of up to £300 per user. The fines are aimed at encouraging early compliance and data accuracy.

Cryptocurrency firms will be held accountable not only for collecting user data but also for verifying it. Due diligence procedures, still to be fully detailed, are expected to be released in an upcoming update from HMRC. In the meantime, the tax authority has advised firms to start preparations now to ensure full compliance by the 2026 deadline.

Rising Adoption, Stricter Oversight

The regulatory push comes amid a sharp increase in crypto adoption across the UK. According to a YouGov survey, the proportion of UK adults who have purchased cryptocurrencies jumped from 6% in 2022 to 14% in 2023. As more individuals and businesses enter the crypto space, regulators are under pressure to ensure proper oversight.

Separately, the Financial Conduct Authority (FCA) is considering a ban on the use of credit for crypto purchases, although regulator-approved stablecoins would be exempt. The FCA is currently consulting with the public and the industry on this potential policy and other measures aimed at protecting consumers.

All crypto firms operating in the UK must be registered with the FCA, which currently enforces anti-money laundering, consumer protection, and advertising rules. Notably, between April 2023 and April 2024, the FCA rejected 86% of crypto registration applications, with a slight improvement to a 75% rejection rate in the current financial year.

A Different Path from the EU

The UK’s approach to crypto regulation significantly differs from that of the European Union’s Markets in Crypto-Assets (MiCA) framework. Unlike the EU, the UK plans to allow foreign stablecoin issuers to operate without the need for local registration. Moreover, there are no volume caps planned on stablecoin transactions—unlike the EU, which may impose such limits to prevent systemic risk.

This divergence reflects the UK’s broader regulatory philosophy: promoting innovation while ensuring compliance. As cryptocurrency becomes increasingly mainstream, the UK’s focus is shifting toward robust oversight without stifling market growth.

Looking Ahead

With the 2026 deadline approaching, crypto firms must prioritise data infrastructure upgrades, compliance training, and verification systems. The upcoming due diligence guidelines from HMRC will further clarify expectations, but the message is already clear: early action is essential.

As the UK tightens its grip on crypto tax compliance, companies that act swiftly and responsibly will be best positioned to thrive in this evolving regulatory landscape.