Key Highlights
- All major cryptocurrency exchanges that operate in the UK will be legally required to collect and report detailed transaction data of their users to HMRC, starting from January 1, 2026
- This new policy is similar to an international trend, as it adopts the OECD’s Cryptoasset Reporting Framework (CARF)
- According to officials, this policy is expected to help the government increase tax revenue by 2030.
According to the official announcement, the government of the United Kingdom is preparing to initiate a crackdown on crypto tax avoidance, starting from January 1, 2026.
UK Government Asks for Domestic reporting of UK resident cryptoasset
This initiative comes from a global standard developed by the Organisation for Economic Co-operation and Development (OECD), which proposed the Cryptoasset Reporting Framework (CARF).
This brand new regulatory framework requires major cryptocurrency exchanges operating in the UK (like Binance, Coinbase, etc) to collect and report detailed information about their user transactions.
The government believes that this regulatory framework will help reduce a multi-billion-pound tax gap, ensuring that people who profit from crypto investments pay their fair share, similar to those who profit from stock trading.
The official document reads, “The CARF was implemented to support the successful Common Reporting Standard (CRS), which allows tax authorities to exchange information about financial accounts. The use of cryptoassets had the potential to erode the success of the CRS, as the CRS does not require the reporting of cryptoasset transactions. By implementing the CARF, participating jurisdictions aim to increase data transparency and support tax compliance internationally.”
How HMRC’s New Reporting Guidelines Will Work
The new HMRC guidelines will directly provide oversight over the rapidly growing cryptocurrency sector, whose market capitalisation currently stands around $3.09 trillion, according to CoinMarketCap.
Starting in January 2026, cryptocurrency-based service providers will be required to gather extensive data on their UK users. This includes personal details such as National Insurance numbers, tax details, and addresses. They will also need to keep detailed records of all transactions, including purchase and sale prices, profits from traders, and any swaps or transfers of assets.
“With platforms set to keep a record of this information from January 1, 2026, ahead of sharing it with HMRC the year after, the tax office will be able to cross-check tax returns against the data they’ve received,” Seb Maley, CEO of tax insurance provider Qdos, said in an interview.
This system is similar to the one already used for traditional bank accounts. The first set of data, which will cover all of 2026, must be submitted to HM Revenue and Customs (HMRC) by 2027. After that, reporting will happen every year.
This information will allow HMRC to cross-check the data against the tax returns filed by individual cryptocurrency holders, which makes it easy to identify people who have not paid the correct Capital Gains Tax on their crypto profits.
“This measure ensures that HMRC will have CARF data on all UK taxpayers using both UK based and non-UK based RCASPs. HMRC will receive this standardised, structured data which is required on an annual basis. HMRC could use existing information powers to request information regarding UK tax residents,” stated in the official document.
What Does it Mean for the UK-based Crypto Traders
The government is planning to implement a new taxation policy to take control over tax evasion in the digital asset sector. The government estimates that these new measures will help it boost tax revenue by 2030.
With this new regulatory framework, users will have to start organising their financial records. Also, cryptocurrency exchanges might mandate the use of tools for users to collect their transaction history and calculate their gains and losses. Users who fail to meet this compliance could face fines.
Countries Across the World Adopts Crypto Taxation Policies with the CARF Standard
The UK is not the first country to implement a new taxation policy for the crypto sector. Many countries are adopting crypto policies with the CARF standard. The European Union is implementing similar rules through its DAC8 directive. Meanwhile, the United States and Japan are also advancing their own frameworks.
However, there is a big question over its potential impact on the crypto investors. Some people are urging the government to ensure that the rules are implemented in a manner that does not overburden small platforms and investors.
