HMRC is preparing to receive details from crypto platforms about the holdings of all UK taxpayers, including personal, business, and trust accounts. The details were unveiled in yesterday’s UK budget, but it doesn’t include an estimate of how much this is likely to raise. What it does do is formalise HMRC’s attempts to get individuals and organisations to report crypto gains as part of their annual tax returns.
Over the last few years, HMRC has been stepping up its Making Tax Digital efforts. It sees this as enabling it to increase tax revenue and reduce losses, especially from fraud or failure to report.
To date, it has allowed individuals to voluntarily report their profits from crypto assets as Capital Gains Tax. The problem is that reporting is voluntary, and HMRC wants to tighten the rules to deal with what it sees as a significant tax avoidance issue.
From 1st January 2026, crypto platforms will start recording gains made by UK-based customers. That information will include how much they paid, how much they sold for and any profits made.
Platforms will send that data to HMRC from 2027. That will allow time for the data flow and integrations to be checked to ensure the process works smoothly. HMRC will then check that data with self-assessment returns to ensure that returns are truthful.
For businesses and trusts, the data will be compared with the tax returns that they file at the end of each reporting period. Most organisations already record their crypto activity. However, for SMEs and the self-employed, HMRC will want to ensure that profits are recorded and paid through the correct channel.
A global crackdown on crypto asset profits
Over the last two decades, there has been an increase in cooperation between countries over taxable assets. The goal has been to improve tax transparency, and while it has been successful in many ways, crypto assets are seen as a loophole.
Key to that cooperation has been the approval of the OECD 2014 Standard for Automatic Exchange of Financial Account Information in Tax Matters. Its global implementation has successfully increased tax revenue for governments. However, when it was being discussed, crypto assets were not considered to have any value at all.
However, since 2017, with the first Bitcoin bubble, the value of that crypto asset has risen substantially. In January 2017, a single bitcoin traded at just $1,003. In July 2025, it hit $124,752, although it has since fallen back to $91,818 as of the time of writing. The number of Bitcoin trades has also soared. Other crypto assets have also seen massive gains and trades over the same period.
For tax authorities, those trades represent a significant amount of lost tax revenue. The OECD goes further, saying, “the ability of individuals to hold Relevant Crypto-Assets in wallets unaffiliated with any service provider and transfer such Relevant Crypto-Assets across jurisdictions, presents the risk that Relevant Crypto-Assets are used for illicit activities or to evade tax obligations.”
Enter CARF to identify all transactions
To address this, the OECD developed the Crypto-Asset Reporting Framework (CARF). It defines Crypto-Assets as “those assets that can be held and transferred in a decentralised manner, without the intervention of traditional financial intermediaries, including stablecoins, derivatives issued in the form of a Crypto-Asset and certain non-fungible tokens (NFTs).”
The breadth of the definition is deliberate because it covers the use of crypto assets by both individuals and businesses. Those businesses, such as Nike, Adidas, Samsung and Ticketmaster, have launched their own NFTs that are regularly traded.
eBay purchased KnownOrigin NFT to allow customers to buy and sell NFTs on its platform. While eBay already reports some transaction data to tax authorities, it’s not clear if that includes NFT trades.
The onus of reporting under CARF falls to anyone who enables the exchange and trading of crypto assets. Reporting under CARF will also require additional due diligence by platforms. That means they will have to revisit their anti-money laundering (AML) and know your customer (KYC) obligations.
This will cause unease among a portion of those who use crypto assets regularly. They are often promoted as anonymous and therefore free from government taxation and tracking. That is now likely to change as exchanges and platforms look at how they record data. Will we see greater pressure for governments for transparency around crypto assets? That is highly likely as tax authorities look for greater revenue for governments.
Governments around the world are also legislating
Over the last year, the US has changed its position to seeing crypto as a valid asset class. In July, President Trump signed into law the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
Additionally, the Digital Asset Market Clarity Act of 2025 sought to define exactly what a crypto asset is. Importantly, it gave the Commodity Futures Trading Commission (CFTC) the power to regulate crypto assets.
The EU introduced its own legislation this year ahead of CARF. The Markets in Crypto-Assets (MiCA) regulation (MiCA) is a harmonised set of rules for crypto-asset service providers (CASPs) and stablecoin issuers. It goes further than the US statutes with strict requirements for authorisation, AML/KYC compliance, and asset safeguarding.
Enterprise Times: What does this mean?
For those who hold crypto assets and have made considerable tax-free profits from them, life is about to get tougher. Countries are now accepting that they need to be regulated and are introducing legislation to do so. Additionally, international agreements such as CARF will make it harder to use offshore exchanges to hide assets.
How much this will raise for HMRC in the UK is unknown. It says that the impact on the Exchequer will be negligible over the next six years. This may be because it has no idea of how much tax underreporting or evasion is going on. Given the sums it spends on financial modelling, that is unlikely.
It has carried out research as to who this will impact. That research shows that those aged 16 to 44 are estimated to be overrepresented in the cryptoasset owner population (76%) compared to the UK adult population (46%). It also says that males are more likely to own such assets (69%) and that those from an Asian or Asian British ethnic background hold more than other sections of the population.
January will see large numbers of people file Self Assessment tax returns. For anyone with crypto assets that haven’t previously been declared, this would seem the right time to correct what they own. If they leave it until HMRC has data from CARF, it will issue its own assessments, and that will inevitably include penalties.
