.png)
UK residents who hold cryptocurrency are facing more scrutiny from HMRC from New Year’s Day, as cryptocurrency service providers will begin passing details of UK holders to the taxman from that date.
HMRC will begin implementing the Cryptoasset Reporting Framework (CARF) from January 1, 2026, which enables cross-border information exchange between tax authorities in relation to transactions involving crypto assets.
CARF rules have been developed by the Organisation for Economic Co-operation and Development (OECD) and incorporated into UK law, because of the rapidly expanding interest and investment in cryptocurrency.
How many people invest in crypto assets?
One in four people in the UK invest in crypto assets, according to a recent survey by Gemini, with the majority of UK residents saying they intend to invest in crypto in the coming year. In fact, 88% of them expect to invest at least 5% of their portfolio in crypto.
These people will have their information sent to HMRC by the reporting crypto asset service providers (RCASPs) as tax authorities request comprehensive information on crypto holdings, and will require UK RCASPs to undertake due diligence in relation to their users.
This means that from January 1, 2026, HMRC “will have CARF data on all UK taxpayers using a UK based RCASP together with information concerning UK taxpayers from overseas RCASPs through the exchange of information”.
Does this only apply if you are using a RCASP based in the UK?
The way this measure is being implemented, and the nature of sharing CARF data across borders, means HMRC will have CARF data on those using UK-based and non-UK based RCASPs. The various jurisdictions participating in this initiative are doing so to increase data transparency and support international tax compliance.
The move is designed to tackle both tax evasion and avoidance, and “to help UK taxpayers meet their tax obligations”. If you extrapolate the Gemini research data of one in four UK residents holding crypto assets, with around 69.3m people living in the UK according to data from the Office for National Statistics, that means as many as 16.63m people could expect to find their data being passed to HMRC in relation to crypto assets.
Most of these (76%) are aged 16 to 44,and men are more likely to invest in crypto assets than women, with 69% of holders being male, according to figures from HMRC. Those from an Asian or Asian British ethnic background make up 11% of holders. The information required is expected to be collected through tax returns and compliance teams, with the accuracy of tax returns kept under review.
We can help you
If you are one of the millions of people who invest in crypto assets either through a UK provider or one overseas, and you want to know what these changes will mean for you, then please contact us and we will do everything we can to assist you.