Crypto investors: is your tax position ready for HMRC’s new data-sharing powers?

HMRC will soon receive detailed data on UK crypto transactions under CARF. Here's what investors need to check before 2027.

HMRC
Planning
Tax

Introduced on 1 January 2026, the Cryptoasset Reporting Framework (CARF) requires cryptoasset platforms and exchanges operating in the UK to collect and report user and transaction data to HMRC.

The first reports, covering the 2026 calendar year, are due by 31 May 2027, and the first exchange of that data between participating countries is expected by 30 September 2027.

Anyone who has bought, sold, exchanged, staked or otherwise transacted in cryptoassets should treat this as the point to check their tax position.

HMRC has been building its picture of crypto activity for several years, and CARF is the biggest step yet in closing the gaps that let some transactions go unreported.

How widely held are cryptoassets in the UK?

Cryptoasset ownership among UK adults reached a peak of 12% in 2024, according to consumer research carried out for the Financial Conduct Authority, before easing back to 8% in 2025. Ownership remains roughly double the level recorded in 2021, and the FCA’s research shows that those who still hold cryptoassets are typically holding larger balances than in previous years.

Many of these individuals may have straightforward holdings. However, crypto taxation can quickly become complex, particularly where transactions involve:

Multiple exchanges or wallets;
Swaps between different cryptoassets;
Staking rewards;
Mining income;
DeFi arrangements;
NFTs;
Overseas platforms; and
Historic transactions spanning several tax years.

A common misconception is that tax only arises when cryptocurrency is converted back into pounds sterling. A disposal for UK tax purposes can in fact occur in a wide range of circumstances, including exchanging one cryptoasset for another.

What has HMRC's crypto compliance activity looked like so far?

HMRC has been obtaining information from crypto exchanges and other third parties for several years and has already run a number of large-scale compliance campaigns.

Freedom of Information data obtained from HMRC shows that more than 100,000 crypto-related nudge letters were issued between 2020 and 2025, with the annual total more than doubling in 2024/25 alone to almost 65,000, up from around 27,700 the previous year.

A nudge letter is not a formal enquiry. It is HMRC’s way of telling a taxpayer that it holds information suggesting their position needs a further look.

In our experience, some recipients find that their position is already correct. Others discover historic omissions, often because they were unaware that a particular transaction was taxable or reportable in the first place.

Why does CARF change the picture?

The introduction of CARF is likely to be one of the most significant developments in crypto tax compliance since cryptoassets became mainstream. Reporting cryptoasset service providers must now collect identifying information about their users and report transaction data to HMRC annually, and the framework has been designed specifically to improve tax transparency and help tax authorities identify undeclared income and gains.

In practical terms, taxpayers should assume that HMRC’s visibility into crypto transactions will keep expanding. As HMRC receives and analyses growing volumes of data, this is likely to lead to:

More crypto-related nudge letters;
More compliance checks and enquiries;
Closer scrutiny of whether reporting is accurate, given how complex establishing cost basis can be; and
More opportunities for HMRC to compare reported figures against third-party information.

CARF itself does not create any new taxes, but it substantially increases HMRC’s ability to identify discrepancies between what a taxpayer has reported and what crypto platforms report on their behalf.

Should you be concerned?

Not necessarily: many crypto investors have already reported their transactions correctly and have nothing to worry about. However, it is surprisingly common for individuals to find issues once their records are reviewed, particularly where there have been several years of activity, transactions across multiple platforms, or historic disposals from periods when crypto tax guidance was less well understood.

The cost of addressing a problem voluntarily, before HMRC prompts it, is usually significantly lower than dealing with the same issue once a formal review is underway. Where historical issues do exist, there may still be an opportunity to regularise matters through HMRC’s disclosure facilities before a formal enquiry begins.

How Price Bailey can help

Our tax specialists regularly assist clients with:

Reviewing cryptoasset transactions and tax reporting;
Responding to HMRC nudge letters;
Calculating capital gains and taxable income;
Making voluntary disclosures to HMRC;
Dealing with HMRC enquiries and compliance checks; and
Advising on complex international and cross-border issues.

If you have bought, sold, exchanged or otherwise dealt with cryptoassets and are unsure whether your tax reporting is correct, now is a sensible time to seek advice. CARF means HMRC’s access to cryptoasset information is only going to increase over the coming years, and a proactive review today could help you avoid costly surprises later.

To discuss your position in confidence, contact the Price Bailey Tax team.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information on this page is intended as a general guide only. While we work to keep our content accurate and up to date, we cannot guarantee that it reflects the position at the time you are reading it. No responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm. For more information on our editorial process, click here.

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