If you trade, exchange, sell, or make payments in crypto assets, then 2026 will be the year when HMRC sees everything much more clearly than before. A new international reporting regime called the Crypto Asset Reporting Framework (CARF) was introduced on January 01, 2026. Exchanges and other crypto asset service providers gather data on their clients’ transactions and provide them to HMRC.

The key here is that  CARF is not a new tax but just a new method of HMRC’s monitoring of what is already required to be reported. So, if you have any crypto-related activities, then now more than ever, it is crucial to report them accurately.  

What is CARF?

The CARF is an international benchmark created by the OECD that aims to conduct automatic information exchange regarding crypto transactions. It is almost identical to the Common Reporting Standard, where exchange of banking account information takes place.

The main aspects of CARF in the UK are:

• Since January 01, 2026, UK crypto asset providers such as exchanges and custodial wallets must collect identification and transaction data from their customers.

• As per the new rule, service providers are supposed to submit their first set of reports by May 31, 2027, in respect of the calendar year 2026.

• In addition to that, non-UK platforms which are present in those participating countries will also report about their UK-based customers, and data exchange between the respective tax authorities will start from 2027.

• Service providers will incur penalties in case of failure to adhere to the new regulation and therefore expect your personal information to be collected.

Why is it important now?

HMRC had access to some exchange data before CARF and had started getting in touch with crypto traders concerning gains that were not declared. The amount and level of detail of the information to come through CARF will be much higher, making it easy for HMRC to cross-check the data from the exchanges against that reported in your Self-Assessment return. HMRC even released its first official statistics regarding taxable gains from crypto assets in August 2026.  

UK taxation of Cryptocurriencies

Crypto assets are typically taxed as capital gains under CGT for individual investors. You would be making a taxable transaction when:

• Exchange your crypto assets for pounds;

• Trade one type of cryptocurrency for another;

• Use cryptocurrency to purchase something;

• Gifting cryptocurrency to someone else except your spouse or civil partner 

However, some activities are taxed on Income Tax, including mining, staking rewards, airdrop earned for performing a task or service, and cryptocurrency earned from work performed. When dealing with frequent trading or business operations, special rules may apply.

Here are a few points that may strike up individuals:

• Swap transactions are taxed. It’s considered a disposal, even if you don’t have to exchange for pounds.

• Pools are relevant. Cryptocurrency is typically pooled, and the cost basis is averaged, considering same-day and 30-day matching rules. However, exchanges do not calculate your cost basis for you.

• Annual exempt amount is limited. Currently, the CGT exemption is set at £3,000, while CGT is charged at 18% and 24% for basic rate and higher rate taxpayers, respectively.

• Losses must be reported. An individual is only able to offset a loss in future years if he reports it to HMRC.

What to do by January 31, 2027

The deadline for the Self-Assessment of the tax year 2025/26 is January 31, 2027. And here is how to prepare for it:

1. Start with gathering evidence. You need to get transaction history from all the exchanges and wallets that you've been using and even those that you no longer use.

2. Don’t forget anything. Combine information from all the platforms, so that what you see and what HMRC will see will be the same.

3. Compute your gains correctly. Use the pooling and matching rules instead of depending on the totals provided by the exchange.

4. Split income and gains. For example, staking, mining, and payments in cryptocurrencies may be treated differently.

5. Update your information. Your platforms should have your correct name, address, and tax residence.

6. Include it in your return. Even if you sustained a loss or felt that the figure is insignificant, include it.

Did you miss out on crypto profits last year?

You’re not alone, and it’s better to come clean now rather than waiting for HMRC to get in touch. Your data visibility to HMRC will only increase from here on in. Based on your situation, you might even qualify for a voluntary disclosure. Disclosing before HMRC finds out will save you a lot in fines. Get professional guidance first so the numbers and the process are correct.

Looking forward to

The UK government has also signaled its intention to amend the tax treatment of certain types of stablecoins starting April 2027, assuming legislation passes through Parliament. We’ll keep clients updated as we learn more.

Help from a London Accounting Firm Ltd.

Our team can assist you with the following matters:

• Calculation of tax on cryptocurrencies including pool tax, staking, DeFi, and NFT transactions

• Completion of your Self-Assessment tax return that includes disposal of cryptocurrency and gains/losses from cryptocurrency

• Voluntary disclosure of past tax years

• Businesses which receive or hold cryptocurrency

The above information is for general informational purposes only. It should not be relied upon as tax, legal, or investment advice. Laws change regularly and vary based on individual situations. You should seek advice from a professional advisor.