The United Kingdom is set to enforce new cryptocurrency tax reporting regulations starting January 1, 2026. This initiative mandates all major cryptocurrency exchanges operating within the UK to collect and report extensive transaction data of their users to Her Majesty”s Revenue and Customs (HMRC). The move aligns with a growing international trend, as it implements the Organisation for Economic Co-operation and Development”s (OECD) Cryptoasset Reporting Framework (CARF).
Officials believe this regulatory change will significantly boost tax revenues, aiming to close a multi-billion-pound tax gap by ensuring that individuals profiting from digital assets contribute their fair share, akin to traditional stock trading. The HMRC”s announcement outlines that under the CARF framework, participating jurisdictions will enhance data transparency and tax compliance on a global scale.
Under the new guidelines, cryptocurrency service providers must gather comprehensive data about their UK users, including personal information such as National Insurance numbers, tax details, and residential addresses. Additionally, exchanges will be required to maintain detailed records of all transactions, encompassing purchase and sale prices, profits from trades, and any transfers or swaps of assets.
As Seb Maley, CEO of tax insurance provider Qdos, noted, “With platforms set to keep a record of this information from January 1, 2026, ahead of sharing it with HMRC the year after, the tax office will be able to cross-check tax returns against the data they”ve received.” This new system resembles the existing one used for traditional banking accounts.
The initial set of data, covering the entire year of 2026, must be submitted to HMRC by 2027, with subsequent reporting occurring annually. This comprehensive information will allow HMRC to cross-reference the data with tax returns filed by individual cryptocurrency holders, making it easier to identify those who have not accurately reported their Capital Gains Tax on crypto profits.
The UK government is spearheading this initiative to combat tax evasion within the digital asset sector. It anticipates that these regulatory measures will enhance tax revenue by 2030. Consequently, cryptocurrency users will need to start organizing their financial records meticulously. Exchanges may also require users to utilize tools to track their transaction history and calculate gains and losses accurately. Non-compliance could result in penalties.
The introduction of CARF-based policies is not unique to the UK; various nations are advancing similar frameworks. The European Union is enacting comparable regulations via its DAC8 directive, while the United States and Japan are also developing their own taxation frameworks. However, there are concerns regarding the potential impact on smaller platforms and investors, with some stakeholders urging the government to ensure that the implementation does not overburden these entities.
