There’s been a lot of sloppy reporting on the UK’s new ‘crypto tax disclosure rules’. See this headline from the BBC by way of example: “Crypto users forced to share account details with tax officials”.
Wrong – the obligation (and any fines for non-compliance) is on the exchange, and not on the individual user. More accurately: “Cryptocurrency exchanges…must now ensure they automatically share up to date and accurate accounts of all their users' earnings.”
Individuals have already for many years been required to declare sales and chargeable gains on Bitcoin and crypto on their tax returns and to pay any tax due as a result. See the link in the thread below, dating from 2018, as evidence.
@bitcoinpolicyuk responded in detail on the new proposals (see the quoted post below). This development is ultimately down to the UK’s implementation of the international arrangement known as CARF, or the Crypto-asset Reporting Framework.
CARF is dangerous for many reasons, but the most acute one is likely to be the huge risk of customer and citizen harm as a result of the gathering, sharing, and almost inevitable leak and disclosure, of extremely detailed personal information, down to minute details of your holdings and even your home address.
Remember that this information is going to be shared not just with HMRC, but also with tax authorities across the world. If you choose to continue to use a KYC’d exchange, be aware that the exchange is now duty bound to gather, share and disclose this information; and if there’s one thing we can know for certain, it’s that governments cannot keep your data safe.
So plan accordingly, be prepared to pay tax on any gains (as is currently the law), and be thoughtful about matters of personal security such as alarms and camera systems at the very least.
Otherwise, if you would prefer to take steps to protect yourself and your family from the very acute risks of data loss, harvesting, and potential physical harm, you may choose to buy Bitcoin without going through a KYC process – namely peer to peer, and as it was initially intended. We have previously tested
@vexl,
@hodlhodl,
@Azteco_ and
@peachbitcoin, or
@RoboSats and @bisqnetwork for more confident users.
These are all linked in the thread below. None of them require you to submit personal data or to put yourself or your family in harm’s way, and none of them are caught by the requirements to report your holdings or trading to HMRC.
People buying cryptocurrency in the UK now need to share their account details or face penalties, new law that came into effect on 1 January, reports BBC.