UK Maintains Crypto Tax Rates, Introduces Stricter Regulations

• The UK will not raise capital gains taxes on crypto, but stricter regulations are on the way.
• The Crypto-Asset Reporting Framework (CARF) will boost global tax transparency for crypto.
• Leaders warn the UK risks losing crypto startups to regions with better policies.

The UK government has decided not to increase capital gains taxes on cryptocurrency in its latest budget. This follows last year’s tax hike on crypto investors. Chancellor Rachel Reeves confirmed that while crypto taxes remain unchanged, tougher reporting and regulatory measures are coming into effect to increase oversight in the sector.

In her Autumn Statement, Reeves froze income tax thresholds and announced plans to raise taxes on dividends, savings, and property income. These tax adjustments are part of a broader fiscal strategy to increase the tax base and ensure support for public services. 

UK Crypto Tax Freeze Amid Stricter Regulatory Measures

Gemini’s UK Compliance Head, Azariah Nukajam, welcomed the move. She stated that crypto would now be treated like any other asset class. Nukajam said this decision ensures that crypto investments remain viable for the long term. However, she also pointed out that this does not mean the government is easing off on regulation.

Alongside the tax announcement, the government is advancing with stricter reporting rules for crypto firms. New measures include the Crypto-Asset Reporting Framework (CARF), set to launch in 2026. The framework would require exchanges to report detailed customer transaction data, expanding oversight and global tax transparency in the crypto sector.

These regulatory changes are part of the UK’s strategy to close tax loopholes and improve compliance. In addition, the government has increased the number of warning letters sent to suspected tax under-payers. Nukajam sees these moves as a sign that crypto firms would face “traditional finance”-style regulations in the near future.

Reeves’s budget is the government’s fiscal mid-term review. It sets out the fiscal policy adjustments before the spring Budget, when more significant tax and spending decisions would be taken. The income tax thresholds freeze, as well as higher taxes on investment income, are intended to shore up the country’s ailing finances.

For Nukajam, these changes appear necessary for crypto firms. She said: A more developed regulatory framework could also bring institutional interest. Being more open and honest would inspire confidence in everyday consumers and move crypto into the wider financial system.

UK Crypto Tax Rates Competitive, Concerns Remain

Last year, changes to the capital gains tax hiked rates on crypto and other investment assets. For crypto investments, taxes have increased to 18% and 24% from the previous 10% and 20% rates. Although that increased the tax burden, tax treatment in the UK remains friendlier than that in other European countries such as Spain and France.

The UK has a more attractive tax regime than Spain, where the rate is as high as 28%, says Nukajam. She added that the UK could take a lesson from Germany, where assets held in crypto for longer than a year are tax-free. 

Even as the tax news was good, some in the crypto industry have raised questions about the UK’s longer-term competitiveness. Antidote CEO Ben Cousens, whose firm creates fintech start-ups primarily focused on Bitcoin, insists the UK could lead the next phase of global innovation.

Related: US And UK Form Joint Crypto Task Force To Implement Rules

Cousens said the UK should invest in growing sectors like AI, fintech, and Bitcoin. He cited past successes in the film and video game industry, where government financial support enabled growth. Building the right environment, the UK could reclaim its position as a world leader in ground-breaking technologies.

Others, such as Richard Muirhead of Fabric Ventures, cautioned that the UK faces losing tech startups to more appealing jurisdictions. With venture capital already so limited in the UK. He thinks high-growth companies would go elsewhere to get more favourable tax policies and regulatory environments.

Muirhead accused the UK of pursuing “economic self-harm” in its current fiscal approach. There are no rewards to start a business, and that could be detrimental to the economic development of the nation and national security, he added. The UK’s future success, he says, hinges on nurturing high-growth sectors such as fintech and Web3.