HMRC’s new crypto tax disclosure facility

HMRC's new crypto tax disclosure facility aims to enforce tax regulations in the evolving cryptocurrency sector. Therefore the express purpose of HMRC's new crypto tax disclosure facility plus their global clampdown on crypto tax evaders, is all part of this process.
HMRC's new disclosure facility for cryptocurrency transactions

Understanding HMRC's new crypto tax disclosure facility

The new disclosure facility highlights the government's heightened interest in cryptocurrency transactions. It's evident this new disclosure facility is designed to encourage taxpayers to voluntarily disclose any previously undeclared transactions involving crypto.

Key objectives

Many crypto investors have still not disclosed their historic transactions either through ignorance or fear of serious reprisal. 

Therefore, HMRC's new crypto tax disclosure facility is intended to provide a straightforward process for taxpayers to report past transactions that may not have been previously disclosed. 

 It is also a method of encouraging compliance with UK tax laws and regulations as they apply to cryptocurrencies.

Features of the new facility

The facility covers a wide range of crypto, including Bitcoin, Ethereum, other altcoins De-Fi platforms transactions and NFT's. Not only does it apply to trading profits but also includes other transactions like mining rewards, airdrops, and gifts. 

This facility offers a comprehensive approach focusing specifically on crypto transactions. HMRC's new crypto tax disclosure facility emphasises the need for complete disclosure for all types of crypto transactions.

As a result, voluntary disclosure using this facility potentially offers more favourable settlement terms than when HMRC discover undeclared transactions..

Who is likely to be affected?

HMRC's new crypto tax disclosure facility covers a wide spectrum of individuals and entities engaging in cryptocurrency transactions. 

This includes individual investors traders traders, professional traders and businesses that accept cryptocurrencies as payment. It also includes miners and participants in DeFi (Decentralized Finance) platforms.

Therefore, understanding UK tax obligations is essential for anyone involved in buying, selling, trading or mining crypto..

Typically these are the cryptocurrency  transactions  which may require disclosure to HMRC. For example selling Bitcoin in exchange for fiat currency or using Ethereum to purchase a property.

Using HMRC's new crypto tax disclosure facility

The disclosure process is straightforward, though requires careful attention to detail. Here's a step-by-step guide to following this procedure:

  • Identify the Transactions: Begin by identifying all cryptocurrency transactions that have not been previously disclosed to HMRC. This includes trades, sales, purchases, and any other forms of crypto asset exchanges
  • Compile Documentation: Collect all relevant documentation related to your cryptocurrency transactions. This includes transaction histories, wallet addresses, exchange records, and bank statements that show the flow of funds.
  • Calculate the Taxable Amount: Determine the taxable amount for each transaction. This will involve calculating the gain or loss by comparing the value of the cryptocurrency at the time of the transaction with its original acquisition cost.
  • Complete the Disclosure Form: HMRC provides a specific form for the disclosure of cryptocurrency transactions. Fill out this form with all the necessary details, including the nature of the transactions, the calculated taxable amounts, and any other relevant information.
  • Submit and Pay: Once the form is completed, submit this to HMRC. If there is a tax liability due, ensure that payment is made by the deadline specified by HMRC to avoid penalties.

Implications if you do not comply

Failing to comply with the disclosure requirements can lead to significant consequences. HMRC is increasingly using sophisticated technology to track and identify undisclosed cryptocurrency transactions. Given HMRC's recent initiatives, we would suggest that HMRC are starting to lose patience with those individuals/businesses who are still non-compliant.

Taxpayers who fail to disclose or inaccurately disclose their transactions may face substantial penalties. These penalties can vary depending on the severity and intent behind the non-compliance. For example, many years ago HMRC offered a disclosure facility for undisclosed foreign income and capital gains on relatively favourable terms. However, those individuals who still have not yet disclosed their sources of foreign income and capital gains to HMRC now face penalties of up to 200%  of any tax liability due. 


HMRC's new crypto tax disclosure facility marks a significant step towards more robust regulation in this sector. As the crypto landscape continues to evolve  staying informed and compliant with HMRC's evolving guidelines is paramount for anyone involved in this space.

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