Crypto reporting is changing: what this means for you - and HMRC

As the global regulatory landscape continues to evolve, two major frameworks are set to reshape how crypto-assets are reported: the Crypto-Asset Reporting Framework (“CARF”) and the European Union’s Directive on Administration Cooperation in taxation (“DAC8”).
 

Announced by HMRC on 24 June 2025 and starting on 1 January 2026, these rules require certain crypto asset service providers (such as exchanges and wallet providers) to collect and report detailed personal and transactional data for users who are UK residents or residents of other CARF-compliant jurisdictions. This is not a new concept to UK tax payers – given that HMRC routinely receives information from traditional financial institutions for the purposes of verifying tax affairs. 

The taxation of crypto assets has been a developing focus for HMRC. It was not until around 2018 that the first taxation guidance became available. Therefore, the fact of the taxation of the asset class (largely through capital gains and/or income or corporation tax) is not new. These regulations shift part of the reporting burden onto service providers, who must now proactively report user information directly to HMRC. Taxpayers, in turn, will be responsible for supplying certain information to enable this reporting, particularly those with high-value portfolios.

What are CARF and DAC8?
 

CARF

As digital assets like cryptocurrencies and tokenised securities become more mainstream, CARF sets out clear, standardised rules for reporting transactions and holdings. Its goal? Greater tax transparency, cross-border information sharing, and alignment with existing frameworks like Common Reporting Standard and Foreign Account Tax Compliance Act (both of which are used to track international financial transactions and report tax information globally).

CARF applies to financial institutions, crypto asset service providers, which includes centralised exchanges (for example, Coinbase and Binance), essentially the entities involved in facilitating transactions, exchanges, or holdings of digital assets on behalf of clients. These entities will be responsible for collecting, reporting, and sharing information about their clients' crypto asset holdings and transactions with tax authorities.

CARF also applies to cryptocurrencies, stablecoins, tokenised assets, NFTs and DeFi tokens, ensuring that nearly all types of digital assets are included.

To avoid overburdening service providers, CARF introduces reporting thresholds. Only transactions above a certain value or account holders who exceed a certain level of digital asset holdings or transaction volumes are subject to reporting requirements, ensuring proportional compliance.

DAC8

DAC8 is aimed at strengthening tax transparency in the digital economy, and is essentially the EU implementation of CARF. It expands existing rules to cover digital assets, ensuring that tax authorities across EU Member States have access to relevant data on cross-border digital transactions.

A key focus of DAC8 is on reporting obligations for digital platforms and digital asset service providers. These entities, including exchanges, wallet providers, NFT marketplaces, and DeFi platforms, must collect and report detailed information about users and transactions. This includes customer identities, transaction amounts, asset types, and wallet addresses.

The directive mandates automatic exchange of information between EU countries, helping tax authorities detect fraud, evasion, and avoidance. It builds on CARF to ensure consistency and clarity in regulation.

What HMRC will receive?

From 1 January 2026, the following information will need to be provided to HMRC by  crypto asset service providers in the UK:

For Individual Users

• Full legal name
• Date of birth
• Home address
• Country of residence
• UK residents: National Insurance number or Unique Taxpayer Reference (UTR)
• Non-UK residents: Tax Identification Number (TIN) and issuing country (if applicable)

For Entity Users (e.g. companies, trusts, partnerships)

• Legal name
• Main business address
• UK entities: Company registration number
• Non-UK entities: TIN and issuing country
• In some cases, details of controlling persons

Transactions

• value
• type of crypto asset
• type of transaction
• number of units

Cross-Border Data Sharing

HMRC will also receive data from non-UK platforms that serve UK users, thanks to CARF. Likewise, HMRC will share data with other tax authorities when UK platforms serve users abroad. This ensures that activity is no longer hidden across borders.

High Net Worth Individuals (“HNWIs”)

For HNWIs, this marks a shift: crypto assets can no longer be seen as being off the radar. If income or gains from crypto assets haven’t been reported correctly, HMRC will now have the tools to identify discrepancies and open tax enquiries.

In short, HNWIs should ensure that all crypto-asset related income and gains are accurately declared in their tax returns.

Conclusion

Crypto assets, due to their decentralised nature, have historically been attractive for those wishing to keep their identity and wealth private .

By establishing a global reporting standard and putting responsibility on service providers, it seeks to reduce the ability of individuals and entities to hide assets and transactions from tax authorities.

Whilst it may result in additional tax where taxpayers did not understand their reporting duties, it should, we hope, continue to strengthen the reputation of the digital asset industry as a legitimate asset and investment. 

about the authors

Waqar is a Partner in the Dispute Resolution department, focusing on the resolution of complex tax matters. He acts for high net worth individuals and corporate clients across all sectors in respect of HMRC disputes and investigations across the full range of taxes. This typically includes VAT disputes, employment tax matters (including 'IR35'/off-payroll working), customs/excise duty issues, tax fraud investigations, and more recently, National Minimum Wage enquiries.

Chris is a Legal Director in the Dispute Resolution team. He focuses his practice on complex (and often international) commercial litigation, arbitration and investigations involving allegations of fraud or dishonesty. He acts for both Claimants and Defendants in those matters.

Leyla is an Associate in the Dispute Resolution team at Kingsley Napley. Leyla has experience acting on a broad range of disputes, including complex cross-border litigation, civil fraud matters, contract disputes, contentious trust and probate claims and arbitration proceedings.