Crypto users forced to share account details with tax officials

12 hours agoShareSaveRachel ClunBusiness reporterShareSaveGetty Images

People buying cryptocurrency in the UK now need to share their account details or face penalties, in changes that came into effect on 1 January.

The move by the UK's tax body is designed to ensure they pay all relevant tax on buying and selling crypto, including capital gains tax.

HMRC will begin automatically collecting information on all users of cryptocurrency exchanges – which are effectively the industry's banks – in a bid to start collecting tens of millions in unpaid tax.

The change comes as the financial watchdog continues its consultation on tougher regulation for the industry, including measures to stop insider trading.

The value of Bitcoin, which is often seen as a barometer of the entire industry, surged from about HMRC has been concerned for some time about high levels of non-compliance among crypto investors," she says.

The new rules coming in will make it much harder for the crypto rich to hide any untaxed gains, giving the tax authorities much more information about crypto users and their transactions.

Cryptocurrency exchanges, which act like banks for the industry allowing people to exchange standard currency for virtual coins, must now ensure they automatically share up to date and accurate accounts of all their users' earnings.

If not, fines may be imposed.

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These Cryptoasset Reporting Framework (CARF) regulations are being implemented in dozens of other countries which will make international cooperation easier for tax authorities to share information.

In the UK, the HMRC estimates there could be many thousands of crypto owners with unpaid tax bills and hope the new rules will bring in at least £300m in the next five years.

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Ms Register warns that anyone who made crypto gains in the 2024-25 financial year may have to file a tax return before 31 January, through a new dedicated section in the self-assessment form.

"HMRC is also looking to encourage voluntary disclosure where people have unpaid tax in earlier years and want to correct their affairs," she says.

"HMRC is running a disclosure facility where taxpayers can come clean on undeclared gains and unpaid tax prior to April 2024."

Meanwhile, the Financial Conduct Authority is running public consultation until 12 February on other proposed crypto rules, which include standards for crypto exchanges, new requirements to ensure brokers act responsibly, and rules around crypto lending and borrowing.

Commenting on the consultation last month, the authority's executive director for payments and digital finance David Geale said regulation was coming.

"Our goal is to have a regime that protects consumers, supports innovation and promotes trust. We welcome feedback to help us finalise these rules," he said.

With additional reporting from Joe Tidy

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Original aticle here: BBC