HMRC has confirmed that cryptoassets are taxable, and since the 2024/25 tax year Self Assessment includes dedicated sections and guidelines for them. Gains are normally liable to Capital Gains Tax (read more about it and Box 51 here), while certain receipts such as mining or employment income fall under Income Tax.

If you fail to declare these, HMRC can apply penalties, interest and, in serious cases, criminal sanctions. From 2026, data-sharing rules under the OECD’s Crypto Asset Reporting Framework (CARF) will make non-compliance easier to detect.

This article explains what happens if you don’t report crypto in the UK, the penalties that apply and the available routes to fix errors.

HMRC’s position on cryptoassets

For HMRC, crypto is not currency but property. Every disposal like selling, swapping, spending or gifting can create a Capital Gains Tax event. Receiving crypto through employment or freelancing, mining or certain rewards can also create taxable income, which has a direct impact on your overall income taxation. As we explained in the crypto tax guide for UK, from April 2025 onwards, taxpayers must use the new boxes in SA108 to disclose these transactions.

What happens if you don’t report crypto

Failing to declare gains or income from crypto is considered tax evasion, in the same way as not reporting profits from shares or other financial assets. HMRC does not treat every omission in the same way: it evaluates the circumstances and classifies the behaviour as careless, deliberate or concealed.

Each category carries different consequences, ranging from additional tax with interest and percentage-based penalties to, in the most serious instances, criminal proceedings.

Failure to notify

If you had taxable crypto gains or income and did not register for Self Assessment or submit the required forms, HMRC can charge a separate penalty for failure to notify. The percentage depends on the behaviour:

• careless: 0% to 30% of the unpaid tax;

• deliberate but not concealed: 20% to 70%;

• deliberate and concealed: 30% to 100%.

The penalty is reduced if you come forward before HMRC contacts you. For deliberate cases, HMRC can assess up to 20 years back. Interest is added from the original due date until the liability is paid.

Penalties for errors or omissions

If you file a return that omits or understates taxable crypto, HMRC can apply tax-geared penalties in addition to the tax owed:

• careless behaviour: up to 30% of the tax due;

• deliberate but not concealed: 20% to 70% of the tax due;

• deliberate and concealed: 30% to 100% of the tax due.

In cases involving offshore assets, the range can be higher. Interest is added from the original due date until the liability is paid in full. Penalties are reduced if you disclose the error before HMRC contacts you.

Penalties for late filing

If you miss the Self Assessment filing deadline, fixed charges and escalating penalties apply:

• £100 immediately after the deadline;

• £10 per day after three months, up to a maximum of £900;

• after six months: an additional penalty of the greater of £300 or 5% of the tax due;

• after twelve months: a further penalty of the greater of £300 or 5% of the tax due.

These fines are charged even where no tax is payable.

Penalties for late payment

Declaring on time but paying late also triggers sanctions. Interest is charged daily on the outstanding balance, and additional surcharges are added:

• 5% of the unpaid tax after 30 days;

• a further 5% after six months;

• another 5% after twelve months.

The longer the delay, the more costs accumulate. A “Time to Pay” arrangement can sometimes prevent these percentage surcharges, although interest will still accrue until the tax is cleared.

Criminal offences

Where HMRC considers the behaviour to be deliberate and fraudulent, it can escalate a case from civil penalties to a criminal investigation. This usually happens when the taxpayer has intentionally concealed taxable income or provided false documentation to obstruct HMRC’s enquiries. In such cases, the offence may be prosecuted as tax evasion or, in the most serious circumstances, as “cheating the public revenue".

If a case reaches court, the consequences extend well beyond civil penalties. Judges can order repayment of the unpaid tax together with all accrued interest, impose unlimited financial fines, and in severe cases hand down prison sentences. The maximum custodial penalty for cheating the public revenue is life imprisonment, although most sentences are shorter and reflect the scale of the fraud.

For most taxpayers, civil penalties and interest remain the principal sanction, but the possibility of criminal proceedings exists when non-compliance is both deliberate and sustained.

Correcting mistakes and voluntary disclosure

If you discover that your crypto transactions have been omitted or misreported, HMRC gives you structured ways to put things right. The method you choose depends on how recent the error is and how extensive the omissions are.

• Amendment: you can amend a Self Assessment return within 12 months of the filing deadline. Corrections can be submitted online or by paper, and the revised figures will replace the original ones.

• Voluntary disclosure: for earlier years or larger omissions, HMRC provides a cryptoasset disclosure service. You must calculate the additional tax, interest and penalties, and the number of years to disclose depends on your behaviour: four years if you took reasonable care, six if careless, and up to twenty if deliberate. Using the service voluntarily usually results in reduced penalties compared to waiting for HMRC to raise the issue.

Using the disclosure service not only limits potential penalties but also closes the issue on clear terms, which is preferable to facing an enquiry initiated by HMRC. For complex situations, many taxpayers choose to work with accountants to ensure the calculations are correct before submitting.

How to avoid HMRC crypto penalties with CryptoBooks

Not reporting crypto is a serious issue, but reporting it incorrectly can be just as damaging. An omission might be obvious, yet so can an error in the cost basis, a misclassified income, or a missing disposal. HMRC expects records that follow strict rules, such as using the section 104 pooling method for capital gains. A single cryptoasset may be bought, moved, staked, swapped, partially sold and then repurchased again. Over several tax years, the trail becomes highly complex and reconstructing it by hand is virtually impossible.

The challenge grows when you add different scenarios. Crypto received through mining or employment has to be reported as income, while gifts, staking rewards or airdrops may fall under different tax treatments. Each case requires the correct categorisation and, without accurate records, mistakes are inevitable.

This is where a software like CryptoBooks becomes essential: it connects directly to the exchanges and wallets you have used, rebuilding the full transaction history automatically. Every fiscal year is recalculated in line with HMRC’s capital gains rules and income thresholds. If something is missing, you can add transactions or upload complete files manually.

You can start by creating a free account and use the full portfolio and transaction features without limits. You can import all your wallets, track your gains and losses, and review your position across tax years at no cost. Only when you need to download the official HMRC-ready tax reports for filing you can decide to upgrade to a paid plan.

The result is a reliable, accurate report that you can file yourself or hand to your accountant, saving both time and fees. With the reporting ready and the calculations correct, the risk of penalties disappears. In short: staying compliant with HMRC does not have to be complicated. With CryptoBooks, managing your crypto tax is straightforward and secure. You can start today, free of charge, and keep your portfolio organized year after year.