HMRC is cracking down on crypto – What taxpayers need to know

As cryptocurrencies become increasingly popular in the UK, the Government is introducing the Organisation for Economic Development (OECD) Cryptoasset Reporting Framework (CARF) and extending it to include domestic reporting. 

This means that, from 1 January 2026, cryptoasset service businesses will have new responsibilities for collecting data and reporting it to HM Revenue & Customs (HMRC), and UK cryptoasset holders will need to provide personal details to their service providers. 

While this should not change the amount of tax you are liable for, it is important not to get caught out by the new compliance requirements.  

What’s changing? 

Currently, HMRC has only limited information on details of disposals and gains in particular circumstances.  

It has already been announced that HMRC will now require full disclosure of any cryptoasset gains or income on Self Assessment forms for the 2024-25 tax year, with a new dedicated section in the capital gain pages for this purpose. 

Under the new reporting requirements of CARF, HMRC will hold comprehensive information of all UK cryptoasset users and investors, including details of transactions and held assets. 

This is designed to help HMRC crack down on cryptoasset tax avoidance and evasion. 

All “reporting cryptoasset service providers” (RCASPs) based in the UK will need to report details of their users to HMRC.  

A business is considered an RCASP if it either transacts cryptoassets on behalf of users or provides a means for users to transact cryptoassets. 

You’ll only need to report on users who are tax resident in the UK or another country that is signed up to CARF rules. 

Personal details you will need to collect include: 

• The user’s name, address, and date of birth. 

• The user’s tax residence. 

• The user’s National Insurance (NI) number or Unique Tax Reference, or the tax identification number (TIN) and the country where it was issued (if the user is not a UK resident). 

• Details of your cryptoasset transactions, including the value of the cryptoassets, the nature of the transactions, and the number of units. 

You’ll need to submit your first report by 31 May 2027, giving details for 1 January 2026 to 31 December 2026. 

A penalty of £300 applies per user for late, inaccurate, incomplete or unverified reports. If you fail to report at all, you could also be penalised.  

Why is the UK introducing CARF? 

By collecting data on cryptoasset users from their service providers, HMRC will be able to identify those who haven’t paid the right amount of tax on gains or income from cryptocurrencies. 

This will help to “unmask anyone evading tax due on their crypto profits,” states HMRC.  

According to estimates from HM Treasury, the new reporting requirements will help to raise up to £315 million in unpaid tax by April 2030. 

Stay compliant with cryptoasset tax 

The introduction of CARF shouldn’t increase the amount of tax you pay, but it will increase your reporting requirements. 

Whether you’re a cryptoasset service provider or an investor, Butterworth Barlow is here to help. 

We can take care of your tax reporting for you, sparing you the burden of extra admin and giving you peace of mind that you’re fully compliant with HMRC. 

With our supportive chartered accountants by your side, you’ll be able to meet your tax obligations with confidence. 

For more information about how we can help you with your cryptoasset tax returns, contact our friendly team today.