As cryptocurrency grows in popularity, the UK’s approach to tax is evolving too. HMRC has recently introduced the Cryptoasset Reporting Framework (CARF), which is designed to make sure individuals and businesses dealing in cryptoassets pay the right amount of tax.
Cryptoassets include a wide variety of digital items, from Bitcoin and Ethereum to stablecoins and NFTs. With CARF now coming into effect, it’s important to understand your obligations and the deadlines involved. Whether you’re a casual investor or run a business that handles crypto, staying on top of the rules will help you avoid penalties and make reporting much simpler.
In this guide, we’ll walk you through the CARF system, explain the new HMRC crypto tax rules details, outline potential penalties for non-compliance, and offer practical steps to help you prepare for the future.
Understanding The Recent HMRC Crypto Tax Rules Details
Under this new system, both individuals and companies that provide crypto services will have to share certain information with HMRC. The goal is to make crypto transactions more transparent and reduce tax evasion. In simple terms, this means HMRC will know more about who owns crypto, what they are doing with it, and how much profit they are making.
In this article, we will cover:
- What Is The CARF Cryptoasset Reporting Framework?
- What Are The New HMRC Crypto Tax Rules 2026?
- Are There Penalties For Non-Compliance?
- What Should Crypto Holders Do Moving Forward?
What Is The CARF Cryptoasset Reporting Framework?
The Cryptoasset Reporting Framework (CARF) is a new system designed to standardise how tax authorities collect information about crypto transactions worldwide. What many people don’t realise is that HMRC has been receiving data from crypto exchanges since around 2021. For example, Coinbase, the UK’s largest registered digital asset company, already shares customer data with HMRC.
CARF is not just a UK initiative. More than 50 countries are adopting similar frameworks, creating a global standard for crypto tax reporting, much like the Common Reporting Standard (CRS) for traditional finance. Crypto service providers, known as RCASPs (Reporting Crypto-Asset Service Providers), are required to collect and report users’ crypto transaction information, including:
- Who conducted the transaction
- What was transacted
- How much value was involved
These details are then shared with the tax authorities, who can automatically exchange this information with other countries. This global approach aims to reduce tax evasion and ensure that crypto gains are appropriately taxed.
In practice, the CARF system allows HMRC to check the information taxpayers provide against the data they receive from crypto service providers. For example, if you report a small profit on your self-assessment but the exchange shows a larger amount, HMRC can spot the difference and follow up. This helps make sure crypto is treated the same as other financial assets for tax purposes. For more details, you can refer to HMRC Cryptoassets Guidance.
What Are The New HMRC Crypto Tax Rules 2026?
The first reporting period under CARF will cover 1st January to 31st December 2026, with all reports due to HMRC by 31st May 2027. From then on, reporting will occur annually. This system gives HMRC the ability to collect, verify, and compare information from both individual taxpayers and crypto service providers.
If you hold or trade cryptoassets, you will need to provide personal details to every crypto platform or exchange you use. This includes:
- Your full name, address, and date of birth
- Your tax residence (the country where you are liable to pay tax)
- Your National Insurance number or tax reference number
- A summary of your crypto transactions, including purchases, sales, and transfers
Providing accurate information allows HMRC to correctly match your crypto activity to your tax records. This helps avoid disputes or errors when calculating capital gains or income tax on crypto profits.
Additionally, these new rules aim to separate crypto reporting from other types of investment reporting, such as shares or property, making it easier for HMRC to monitor and enforce compliance. For guidance on UK tax residence rules, visit GOV.UK Tax Residency.
If you’re unsure how these new rules apply to you or your business, getting professional advice can make a big difference. The team at Digital Tax Matters, one of the trusted accounting firms in Bedford, can help you make sense of CARF, keep your records in order, and ensure your crypto reporting meets HMRC requirements. With their support, staying compliant is much easier and less stressful.
Are There Penalties For Non-Compliance?
Failure to provide the required information can result in fines of up to £300. Similarly, if a crypto service provider provides HMRC with incomplete or inaccurate details about its users, it can face fines of up to £300 per user.
These penalties are intended to encourage honesty and accuracy in reporting. More severe enforcement measures may be taken in cases of repeated or deliberate non-compliance, including larger fines or legal action.
It’s important to note that HMRC has become increasingly sophisticated in cross-checking crypto transaction data. The CARF framework provides a much higher level of transparency, meaning discrepancies between reported income and exchange data are likely to be noticed quickly. To understand the consequences of non-compliance and steps for resolving disputes, we recommend taking a look at the HMRC Penalties Guide.
What Should Crypto Holders Do Moving Forward?
Starting with the 2024–25 tax year, HMRC introduced new boxes on the self-assessment tax return specifically for cryptoasset gains and losses. This change separates crypto from other investments, such as shares or property, making it easier to monitor compliance.
If you currently own or have ever held crypto, it’s crucial to prepare for CARF reporting. Recommended steps include:
- Maintain accurate records: Record all transactions, including dates, amounts, and values in pounds.
- Update your personal details: Ensure your information is up to date across all crypto platforms you use.
- Seek professional advice: Speak to an accountant or tax advisor familiar with crypto tax rules, such as our team at Digital Tax Matters. We can help you determine what needs to be reported and when.
- Review your tax returns carefully: Check that all crypto gains and losses are correctly declared to avoid discrepancies.
These proactive steps will make compliance easier when CARF reporting begins. By staying organised and informed, you can minimise the risk of penalties and simplify your annual tax reporting process. HMRC Crypto Tax Records Guidance provides advice on keeping records.
Looking Ahead: Preparing For The Future
The introduction of the Cryptoasset Reporting Framework is a big change in how HMRC monitors and taxes digital assets. Its main aim is to make the system more transparent and ensure everyone pays the right amount of tax.
The rules may seem strict, but they’re mainly about accurate reporting and keeping good records. For anyone who stays organised and provides the correct information, compliance is straightforward.
Getting prepared now—by keeping thorough records, updating your personal details, and seeking professional advice—can help you avoid fines and make sure you’re ready for CARF reporting in 2026 and beyond.
At Digital Tax Matters, our accountants in Bedford specialise in digital accounting and are fully up to date with HMRC’s crypto tax rules. If you need support or guidance, you can contact us to book an appointment and receive tailored advice. We can help you navigate CARF compliance and make crypto tax reporting as simple and stress-free as possible.