The UK strengthens tax oversight of digital assets

🇬🇧 The UK strengthens tax oversight of digital assets

As of January 2026, new tax rules have come into effect in the United Kingdom, significantly changing the approach to reporting profits from digital assets. The country has joined the international CARF initiative — a global system for automatic exchange of tax data involving dozens of jurisdictions. From now on, platforms dealing with digital assets are required to share user transaction data with the UK’s tax authority (HMRC).

This means that all operations involving the purchase, sale, exchange, or use of digital assets fall under the scrutiny of regulatory authorities — even if the transactions are carried out on foreign platforms, provided the user is a UK tax resident.

The most common form of taxation in this context is the capital gains tax. It applies to profits generated from selling digital assets, exchanging one instrument for another, or using such assets to pay for goods or services. Transfers to third parties (including gifts) are also subject to taxation, unless the transfer is between spouses or civil partners.

The UK tax authority sets a standard annual tax-free allowance of £3,000. Any profits exceeding this threshold are subject to taxation: 10% for individuals in the basic tax band and 20% for those in the higher tax band. In cases where the activity is classified as business-related, income tax may apply instead, which involves higher progressive rates.

Special attention should be paid to the new reporting obligations. All individuals and legal entities conducting transactions with digital assets must keep detailed records of dates, volumes, purchase and sale prices, as well as documents confirming the source of funds and the status of each transaction. This data must be stored for at least five years and submitted through the annual tax return.

Thanks to the new CARF system, HMRC will now receive direct access to user information — including those who operate on foreign platforms. This makes it nearly impossible to conceal profits or attempt to bypass the system via offshore structures. Intentional tax evasion is subject to strict penalties, ranging from significant fines to criminal liability.

In light of these developments, investors, traders, and businesses operating in the digital finance sector must adapt to the new environment — both legally and operationally.

How FINANCEIQ HUB LTD helps businesses adapt

FINANCEIQ HUB LTD provides full support for operating under the UK’s new framework. We help properly structure digital asset operations and offer consulting.