According to research conducted by YouGov on behalf of the Financial Conduct Authority, 12% of UK adults own cryptoassets. However, although cryptoassets are becoming increasingly popular, not everyone dealing with them understands the tax liabilities involved.
Crypto Understanding
According to HMRC research from 2022, only 42% of those who owned cryptoassets were aware that they might be liable to pay tax when they bought goods and services using cryptocurrency. 37% reported that they knew little or nothing about capital gains tax, with 22% not familiar with it at all.
Potential Tax Liabilities
There are various cryptoasset transactions which may lead you being liable to pay tax:
- Disposal – if you make a gain from selling or exchanging cryptoassets, gifting them to another person (aside from charity or your spouse/civil partner), or using them to pay for goods or services, you may be subject to capital gains tax. You can find out more about whether you need to pay tax on cryptoasset disposal here
- Mining – those who mine cryptocurrencies, where they earn rewards for validating blockchain transactions are liable to tax on their proceeds earned from this. You can find out more about this here
- Staking – staking is essentially when you ‘lock up’ your digital coins to support a blockchain network and earn rewards in the form of more crypto in return. These rewards are taxable as income. You can find out more about this here
- Employment income – if you receive cryptoassets as employment income, the value of what you receive will be subject to income tax and national insurance. You can find out more about this here
Crackdown on Unpaid Crypto Tax
As of 1st January 2026, there will be new crypto reporting rules in the UK. Those providing cryptoasset services in the UK must need to start collecting certain user and transaction data from crypto holders.
Users of crypto who fail to provide accurate, complete, and verified information will face fines up to £300 per user. These new reporting rules intend to tackle tax non-compliance from those involved in the cryptoasset world.
This change is part of the UK’s implementation of the Cryptoasset Reporting Framework, a global standard developed by the Organisation for Economic Co-operation and Development.
You can make a voluntary disclosure of any unpaid tax from income or gains from cryptoassets to HMRC here. Making a voluntary disclosure to HMRC may mean reduced penalties and more leniency, and can also give you peace of mind.