EU €3 Customs Duty 2026: What UK Sellers Will Pay
May 12, 2026
Does HMRC know about my crypto? Increasingly, yes. From 1 January 2026, UK crypto platforms must collect your identity and transaction data and report it to HMRC under the Cryptoasset Reporting Framework. Combined with blockchain analytics and bank records, HMRC can now trace crypto payments made to suppliers back to your business.
What’s in this guide
- How HMRC tracks crypto in 2026
- Does HMRC know about my crypto if I only pay suppliers with it?
- Paying a supplier in crypto is a disposal
- The records HMRC expects you to keep
- What to do if you get a crypto nudge letter
- FAQs
More UK ecommerce sellers now pay overseas suppliers in stablecoins or Bitcoin to skip slow bank transfers and currency fees. It works, but it is not private. If you have wondered does HMRC know about my crypto, the 2026 answer is that it knows far more than before. This guide covers how, why paying a supplier is a taxable event, and what records keep you safe. Prefer to hand it over? Our ecommerce accounting team can take it on.
How HMRC tracks crypto in 2026
For years, crypto felt private. That era has ended. HMRC now pulls crypto data from several directions at once, and the volume jumped sharply in 2026.
The biggest change is the Cryptoasset Reporting Framework, or CARF. From 1 January 2026, UK crypto platforms must collect identifying details from every user, including name, address, date of birth, National Insurance number and tax residency, alongside a full record of purchases, sales, swaps and transfers. They report it straight to HMRC, with the first period running to 31 December 2026 and platforms filing by 31 May 2027. You can read the official gov.uk CARF guidance here.
HMRC also runs Connect, a data-matching system that cross-references banks, payment processors and now crypto exchanges to flag income that does not match declared activity. It has also bought blockchain analytics software that traces funds between wallet addresses, stripping away much of the anonymity people assume crypto gives them.
The results are already visible. HMRC sent close to 65,000 “nudge letters” to suspected crypto users in the 2024 to 2025 tax year, more than double the year before. From 2027, the UK will also swap crypto data automatically with 47 other countries, so an overseas exchange is no longer a blind spot.
Does HMRC know about my crypto if I only pay suppliers with it?
Plenty of sellers assume the reporting rules only catch investors who trade for profit. They do not. CARF covers every transaction type, and that explicitly includes transfers and payments, not just sales on an exchange. So yes, does HMRC know about my crypto when it only moves out to suppliers? In practice, increasingly so.
Here is the trail. You almost certainly bought the crypto with GBP from a UK bank account, which leaves a clear fiat record, on an exchange that captured your identity through Know Your Customer checks. When you withdraw crypto to your own wallet to pay a supplier, that wallet address becomes linked to you in the exchange’s records, and blockchain analytics can then follow the payment to the supplier and back.
None of this means paying suppliers in crypto is wrong. It is a legitimate way to settle invoices, often faster and cheaper than an international bank transfer. The point is that it is recorded. If your bookkeeping does not match what HMRC can already see, that mismatch is what triggers an enquiry.
Paying a supplier in crypto is a disposal
This is the part most sellers miss, and it catches people out. When you pay a supplier in crypto, HMRC treats it as a disposal of an asset, the same as if you had sold it. The disposal happens whether you make a gain or not.
Work it out like this. Take the GBP value of the crypto on the day you bought it, and the GBP value on the day you paid the supplier. The difference is a gain or a loss. If you trade as a sole trader or a limited company, the treatment differs: a company reports the gain within Corporation Tax as a chargeable gain, while a sole trader reports it through Capital Gains Tax against the annual exempt amount.
A quick example. You buy £4,000 of Bitcoin in March. By June it is worth £4,600, and you use it to pay a supplier’s invoice. You have made a £600 gain that has to be reported, even though no money touched your bank account. The invoice itself is still a normal deductible business cost at its £4,600 GBP value.
HMRC pools crypto of the same type under Section 104 rules, so the cost is averaged across your holdings rather than tracked coin by coin. The detail sits in the HMRC Cryptoassets Manual. If you pay suppliers regularly, the maths gets fiddly fast, which is why clean records matter so much.
Need this done for you? Our FCCA-chartered team handles crypto bookkeeping and disposal calculations for UK ecommerce sellers every day. Book a free 30-minute call and we’ll show you what we’d do in the first 30 days.
The records HMRC expects you to keep
HMRC expects a business paying suppliers in crypto to keep records as detailed as any other part of your accounts. For every transaction that means the date, the type of token, the quantity, the GBP value at the time, any transaction fees, and the wallet addresses or exchange accounts involved.
The GBP value is the part people skip. A payment recorded only in Bitcoin or USDT tells HMRC nothing about the gain or loss. You need a sterling figure pinned to the date of each disposal, the basis HMRC sets out in its guidance on paying tax when you sell or use cryptoassets. Export CSV statements from every exchange and wallet you use and keep them, because exchanges sometimes restrict access to old data or close accounts.
Good crypto bookkeeping also feeds into Making Tax Digital. As MTD widens its reach, HMRC expects digital records and software, not a spreadsheet patched together at year end. Tools such as Xero paired with a crypto tax calculator can convert each payment to GBP and produce the audit trail HMRC wants. With solid records, a nudge letter becomes a quick clarification rather than a costly investigation.
What to do if you get a crypto nudge letter
A nudge letter is not a fine or a formal investigation. It is HMRC telling you it holds data suggesting crypto activity it expects to see declared. With 65,000 going out in a single year, receiving one does not mean you are a target, but ignoring it is the worst move you can make.
Read what HMRC is actually asking, then check your own position. Pull your exchange and wallet records, work out whether any disposals, including supplier payments, created gains you have not reported, and respond within the deadline given. If you do owe tax, HMRC’s voluntary disclosure routes almost always mean lower penalties than waiting to be found.
If the numbers are unclear or several tax years are involved, speak to a chartered accountant who understands crypto before you reply. A measured, accurate response closes the matter. A guess, or silence, tends to invite a deeper look.
Frequently asked questions
Does Coinbase report to HMRC?
Yes. Coinbase is a crypto platform serving UK customers, so under the Cryptoasset Reporting Framework it must collect and report your identity and transaction data to HMRC. This applies from 1 January 2026, with the first report due by 31 May 2027. Most major exchanges used by UK customers fall under the same rules.
Do I pay tax when I pay a supplier in crypto?
Possibly. Paying a supplier in crypto is a disposal, so any rise in the crypto’s GBP value between buying it and spending it is a taxable gain. A limited company reports this within Corporation Tax, a sole trader through Capital Gains Tax. The supplier invoice itself remains a normal deductible business cost.
Can HMRC see my private crypto wallet?
Often, yes. The moment you move crypto between a regulated exchange and a private wallet, that wallet address is linked to your identity in the exchange’s records. HMRC’s blockchain analytics software can then trace payments to and from that wallet, including invoices you settle with suppliers.
Is it legal for a UK business to pay suppliers in crypto?
Yes. There is no rule against settling supplier invoices in cryptocurrency, and many ecommerce sellers do it to cut the cost and delay of international payments. The obligation is simply to record each payment correctly, report any gains, and keep the GBP-valued evidence HMRC expects.
What happens if I ignore an HMRC crypto nudge letter?
Ignoring a nudge letter usually makes things worse. HMRC already holds data suggesting undeclared crypto activity, and no reply can escalate to a formal enquiry, higher penalties, interest, and in serious cases a criminal investigation. Responding promptly, even to confirm nothing is owed, almost always costs less.
Talk to a UK ecommerce accountant
If you’d like a hand applying any of this to your business, our FCCA-chartered team works with over 700 UK ecommerce sellers across Amazon, Shopify, eBay and TikTok Shop. Tell us about your store and we’ll show you exactly what we’d do. Book a free consultation or request a tailored quote.
