Stricter Crypto Regulation and Reporting Requirements

The Government is contemplating significant changes to how crypto assets are regulated following a series of market disruptions, including the collapse of FTX, one of the world’s largest crypto exchanges. The Treasury is currently consulting on the best approach to regulate a wide range of crypto asset activities, intending to provide more safeguards, operational risk controls, data reporting arrangements, and good governance to protect investors.

In addition to regulatory changes, the UK government is also introducing new reporting requirements for taxpayers regarding their crypto assets. Chancellor of the Exchequer Jeremy Hunt announced in the budget that UK taxpayers will have to separately report crypto assets on their tax forms starting in the 2024/25 tax year. This move is expected to raise an extra £10 million per year for the public purse.

The accountancy profession has welcomed the new requirements for taxpayers to declare crypto assets separately. The move will help remind taxpayers that they need to consider the tax position of their crypto holdings if they aren’t already and help avoid unnecessary taxpayer confusion.

Coinbase users in the UK have been informed that their names must be given to HMRC if they cashed out more than £5,000 in fiat during the 2021 tax year. This is not the first time Coinbase warned its users of financial disclosures to HMRC, as the authority reached a deal with the exchange in 2020.

It is reported that around 6% of UK adults own cryptocurrency. The Spring Budget costing document estimates that the measure could raise an additional £10 million per year in CGT revenues. The Association of Taxation Technicians (ATT) has welcomed the announcement of the alteration to the self-assessment tax return for crypto assets.

Need help with your crypto taxes? Contact our team of experts at Mercian Accountants for professional guidance on crypto tax planning and regulatory compliance.