Sign Up Your Client for Making Tax Digital for Income Tax: Crypto Income Report

If you are an agent, you can now use the online service to sign up your client for Making Tax Digital for Income Tax. This change affects how your crypto income report is submitted to HMRC. Starting from the 2026-27 tax year, many self-employed individuals and landlords must keep digital records and send quarterly updates. For crypto traders, this means your crypto gain loss report must be integrated into the new system. Understanding the process is key to staying compliant.

What Is Making Tax Digital for Income Tax?

Making Tax Digital (MTD) for Income Tax is HMRC's initiative to modernise tax reporting. It requires businesses and landlords with income over £50,000 to use compatible software to keep digital records and submit quarterly summaries. From April 2027, the threshold drops to £30,000. For crypto traders, this means your crypto income report must be part of your digital records. If you trade crypto as a business or as part of a trade, your crypto gains and losses need to be reported through MTD-compatible software.

How to Sign Up Your Client

As an agent, you can sign up your client through the HMRC online service. You will need your client's Government Gateway details and their Unique Taxpayer Reference (UTR). The process involves authorising yourself as their agent and then enrolling them for MTD. Once enrolled, you can submit quarterly updates on their behalf. For clients with crypto income, ensure that your software can handle form 8949 crypto or equivalent UK reporting. Many tools now support crypto schedule d and sa108 crypto reporting.

Why Crypto Traders Need to Act Now

If your client trades crypto, they may already be required to report gains on their Self Assessment. With MTD, this reporting becomes more frequent. A crypto gain loss report must be submitted quarterly, not just annually. This means you need a system that tracks every trade and calculates gains in real time. Using a dedicated crypto tax tool can simplify this. It can generate a crypto income report that aligns with HMRC's requirements. Do not wait until the deadline. Start the sign-up process early to avoid penalties.

Compatible Software for Crypto Reporting

Not all accounting software supports crypto transactions. You need software that can import data from exchanges, handle multiple cryptocurrencies, and calculate gains using acceptable methods like FIFO or section 104 pooling. Some tools also generate form 8949 crypto equivalents for UK reporting. When choosing software, check that it can produce a crypto schedule d and sa108 crypto outputs. This will save you time and reduce errors. Many agents now use specialised crypto tax platforms that integrate with MTD-compatible accounting software.

Common Mistakes to Avoid

One common mistake is failing to report all crypto income. This includes income from staking, mining, airdrops, and lending. Another is using the wrong cost basis method. HMRC expects you to use a consistent method. Also, do not forget to report crypto-to-crypto trades. Each trade is a taxable event. Your crypto gain loss report must include every disposal. Finally, ensure your records are digital and backed up. HMRC can request them at any time.

Illustrative Scenario

To illustrate how this applies in practice, consider the following scenario: James is a freelance graphic designer in London who also trades cryptocurrencies. His crypto income from trading exceeds £50,000 in the 2026-27 tax year. His accountant signs him up for MTD for Income Tax. They use CryptaTax to generate a crypto income report that integrates with their MTD software. James now submits quarterly updates showing his crypto gains and losses. This keeps him compliant and avoids penalties. The accountant saves time because CryptaTax automatically calculates gains and produces the required reports.

Source: HMRC / GOV.UK