Cryptoasset Reporting Framework: Key Information for Clients Ahead of January 2026
HM Revenue and Customs (HMRC) has confirmed that the new Cryptoasset Reporting Framework (CARF) will come into effect in the United Kingdom from January 2026. This marks a significant development in the regulation and taxation of cryptoassets. Both businesses facilitating crypto transactions and individuals holding digital assets will be subject to new reporting requirements.
As your advisors, we aim to ensure that you fully understand the changes and how to prepare effectively.
What is CARF and Why It Matters
CARF is an international reporting standard designed to enhance transparency within the cryptoasset sector. It mandates that cryptoasset service providers in the UK collect and report detailed customer and transactional information directly to HMRC.
The intention is to ensure that gains and income derived from digital assets are properly declared for tax purposes. This framework aligns cryptoasset reporting with the automatic financial reporting standards already used for traditional banking and investment activities.
Who Must Report and What Information is Required
Commencing from 1 January 2026, any UK business that facilitates the exchange or transfer of cryptoassets will have to collect specific information about each user. The term “cryptoasset” encompasses Bitcoin, stablecoins, non-fungible tokens (NFTs), and other digital tokens.
Individuals engaging with cryptoasset service providers will need to supply the following information:
- Full name, address, and date of birth
- Tax residency
- National Insurance number or tax reference
- A summary of crypto transactions
This requirement applies to every provider an individual engages with. If you hold cryptoassets or have held them previously, you will be compelled to provide this information upon request.
Reporting Deadlines
The inaugural CARF reporting period will cover activities from 1 January to 31 December 2026. Service providers will then have until 31 May 2027 to submit their full report to HMRC. Given the volume and complexity of crypto transactions, providers should begin preparations now to ensure accurate data collection well in advance of the reporting deadline.
Penalties for Non-Compliance
Both individuals and service providers will incur financial penalties for not meeting the new obligations:
- Individuals who do not offer the required personal information may face fines of up to £300.
- Service providers may be fined up to £300 per user if their reporting is incomplete or inaccurate.
These penalties underscore the critical importance of providing correct information on time.
Changes to Self-Assessment
HMRC has already started tighter reporting requirements. The Self-Assessment tax return for the 2024 to 2025 period includes new boxes allowing taxpayers to report cryptoasset gains and losses separately from other capital transactions.
Once CARF is operational, HMRC will cross-check information received from service providers against Self-Assessment filings, and any discrepancies may trigger further inquiries.
How We Can Support You
If you currently hold cryptoassets or have previously engaged in crypto transactions, it is vital to understand your reporting obligations before the CARF implementation. We can help you with:
- Identifying the information, you will need to provide
- Reviewing historical crypto transactions for tax purposes
- Preparing Self-Assessment disclosures
- Ensuring compliance with HMRC requirements
- Supporting businesses in collecting and reporting data under CARF
This is a significant shift in the compliance landscape for digital assets. Taking steps now will help you avoid penalties and ensure your tax affairs remain in order.
Please do not hesitate to contact us should you wish to discuss how these changes may affect you or your business.