From 2026 the UK will implement the OECD’s Crypto-Asset Reporting Framework (CARF), introducing for the first time a systematic reporting obligation for crypto activity. Registered exchanges, custodial wallet providers and, in some cases, DeFi applications or protocols with a controlling entity will be required to collect their clients’ tax information and transmit it to HM Revenue & Customs (HMRC).

Until now, the sector has largely operated in a grey zone: some taxpayers declared their holdings, many did not, and the authorities had limited tools to verify compliance. From 2026 this will change. Tax due diligence becomes mandatory for service providers, and crypto transactions will feed directly into HMRC’s data flows. For anyone investing or trading in crypto, compliance will no longer be optional but an integral part of the UK tax system.

What is CARF in the UK?

CARF is the OECD’s Crypto-Asset Reporting Framework, which the UK has committed to implement from 1 January 2026. It builds on the international model used for over a decade to exchange tax information between jurisdictions, such as the Common Reporting Standard (CRS) for bank accounts and financial instruments. Previous regimes required financial institutions to report on bank balances, interest, dividends and shareholdings. With CARF, for the first time, the scope is extended to crypto-assets.

In practice, this means that actors who were previously outside the radar, centralised exchanges, custodial wallet providers and, in some cases, DeFi protocols or applications where a controlling entity can be identified, will be treated in the same way as banks and brokers for tax reporting purposes. UK-based cryptoasset service providers (RCASPs) will need to collect standardised sets of information on users, including those resident in the UK or abroad, and report them annually to HMRC.

The government’s stated aim is to close the gaps that allowed capital to flow through crypto without effective oversight, creating opportunities for tax evasion and under-reporting. From 2026, transaction data will be compiled into national reports, and from 2027 these reports are expected to be exchanged internationally with other tax administrations that have also adopted CARF. The result is a new system of transparency that, in scope and detail, brings crypto-assets much closer to the reporting standards already applied to the banking and financial sector.

When does CARF take effect in the UK?

The UK confirmed its adoption of the OECD Crypto-Asset Reporting Framework (CARF) in 2023. Unlike an EU directive, there is no need for national transposition: the government has already legislated through Finance Act 2024 and subsequent HMRC guidance.

From 1 January 2026, UK cryptoasset service providers (RCASPs), including exchanges and custodial wallet providers, will be required to start collecting user and transaction data in line with the CARF standards. HMRC has made clear that providers must be ready to identify their clients, record their tax residency and keep structured records of crypto transactions from that date.

The first reporting of this information is expected by 31 May 2027, covering the 2026 calendar year. From that point, the UK intends to exchange this data automatically with other tax administrations that have also implemented CARF. For UK taxpayers, this means that from 2026 every transaction will be systematically recorded, and from 2027 HMRC will be able to compare those records directly with what is reported in your Self Assessment tax return. The next step is understanding exactly what information will be included in these reports, and how it can be reconciled with your declared income and gains.

What data will be reported

CARF does not only define which providers are in scope; it also sets out the exact information that must appear in tax reports. Every UK-based cryptoasset service provider (RCASP) will have to collect and transmit a standardised set of data. This obligation applies equally to platforms widely used by UK investors, such as Binance, Kraken and others operating with UK clients.

The reporting starts with client identification: full name, date of birth, address, country of tax residence, and a tax identification number (for UK residents this will usually be the National Insurance Number or Unique Taxpayer Reference). To this are added the details of crypto transactions: crypto-fiat conversions, crypto-to-crypto exchanges, transfers between wallets, stablecoin transactions and in some cases payments made with crypto debit cards. Special attention will be given to cash-outs into bank accounts, which are expected to become a central focus of HMRC’s compliance checks.

So what changes for UK taxpayers?

For individuals investing in crypto in the UK, the tax rules remain the same: you must declare gains and income through Self Assessment, paying Capital Gains Tax on disposals above the annual allowance and Income Tax where relevant. The CARF does not create new taxes, but from 2026 it will give HMRC an additional tool: direct access to transaction data reported by service providers.

In practice, if you dispose of crypto and fail to include the gain in your Self Assessment return, the information supplied by exchanges and wallet providers will highlight the mismatch. If you move funds back into your bank account without declaring the underlying transactions, HMRC will see the inconsistency between your reported figures and the data it receives under CARF. In such cases you may be contacted with a compliance letter, an invitation to correct your return before more formal action is taken.

Preparing for CARF with CryptoBooks

From 2026 your crypto data will flow directly into HMRC’s systems through the CARF framework. This means every exchange, transfer and cash-out will be easier for HMRC to match against what you report in your Self Assessment return.

With CryptoBooks you have a single tool to calculate your Capital Gains Tax, track gains and losses, and generate complete reports of your transactions, balances and movements. You can also create ready-to-use files that slot directly into your Self Assessment submission, giving you an organised, consistent record aligned with the new CARF standards.