UK crypto tax reporting: what CARF means for you

The global tax transparency landscape is shifting decisively to include digital assets.

The OECD’s Crypto-Asset Reporting Framework (CARF) establishes a common international standard for the automatic exchange of tax information on crypto-assets, similar in spirit to the Common Reporting Standard (CRS) for financial accounts.

The UK has publicly committed to implementing CARF alongside amendments to the CRS, aligning with a broad coalition of jurisdictions that intend to begin exchanges on a common timeline.

In practice, this means that crypto-asset service providers operating in or serving UK tax residents will be required to conduct due diligence on users and report specified information on crypto transactions to HM Revenue & Customs (HMRC), which will then be exchanged with partner tax authorities under international agreements.

For individuals who hold or trade crypto-assets through platforms, CARF represents a step-change in transparency rather than a change in the underlying tax rules.

The UK tax treatment of crypto remains grounded in existing legislation and HMRC guidance – capital gains tax for disposals, income tax for certain rewards or fees and miscellaneous income rules in specific cases.

CARF does not alter tax liability; it increases the likelihood that HMRC receives detailed third-party data to cross-check against returns. As a result, accurate record-keeping, filing discipline and consistency between self-reported information and platform-reported data become more important.

Which crypto platforms must report under CARF?

CARF applies to ‘Reporting Crypto-Asset Service Providers’, broadly capturing entities that, as a business, provide services to exchange, transfer or otherwise intermediate transactions in relevant crypto-assets for or on behalf of customers. This generally includes centralised exchanges and brokers, certain hosted wallet providers and other intermediaries with sufficient control or knowledge to perform due diligence and report.

The framework is designed to be technology-neutral and to cover crypto-to-fiat and crypto-to-crypto exchanges, as well as certain transfers. DeFi activities may be within scope where an entity exercises control or provides a qualifying intermediary service; purely self-executing protocols with no controlling service provider present more complex questions, which the UK will address through detailed regulations and guidance.

Not all digital assets fall within CARF. The OECD deliberately excludes assets already captured by the revised CRS (such as certain tokenised securities treated as financial assets).

Conversely, stablecoins, exchange tokens and many commonly held crypto-assets are typically within CARF’s remit. The UK, implementing CARF in tandem with CRS updates, aims to reduce gaps and overlaps so that most retail-facing crypto platforms with UK users will be required to report.

What platforms will collect and report about you

Under CARF, platforms must apply customer due diligence procedures akin to financial KYC to determine each user’s tax residence and obtain taxpayer identification numbers (TINs), dates of birth and other identifying details.

For pre-existing accounts, transitional due diligence rules apply; for new accounts, onboarding standards will tighten. Individuals should expect more frequent and formal requests from platforms to confirm address, country(ies) of tax residence and TINs, and to provide documentary evidence where necessary.

Reportable data focuses on transaction-level information. For each reportable user, platforms will report identifying information and details of relevant crypto transactions. This includes the type of asset, gross amounts paid or received, fair market values in fiat currency at the time of the transaction and, where applicable, aggregate proceeds from disposals.

Importantly, CARF’s architecture is for automatic exchange between jurisdictions. If you are UK tax resident and transact on a non-UK platform in a participating jurisdiction, that platform will typically report to its local authority, which will in turn share the data with HMRC.

Conversely, UK-based platforms will collect and share information regarding users who are tax resident in other participating jurisdictions.

Practical implications for UK individuals using crypto platforms

For most users, the impact is behavioural rather than substantive.

• Expect increased KYC. Failure to provide requested tax residency information, TINs or documentation may result in account restrictions. Ensuring that your platform profile matches your actual tax residency status is essential, particularly if you’ve moved during the year or maintain ties to multiple jurisdictions
• Reconciliations and record-keeping matter more. HMRC will receive transaction summaries that can be algorithmically matched with your Self Assessment returns. Discrepancies – such as omitted crypto-to-crypto disposals, failure to report staking rewards or inconsistent fair market value conversions – are more likely to trigger enquiries. Maintaining a contemporaneous log of trades, transfers between wallets, acquisition costs, disposal proceeds and the fiat exchange rates used will facilitate accurate filings and defensible positions. If you use portfolio tracking software, align your settings to mirror how platforms report under CARF where possible
• Moving assets to self-custody does not remove them from view. Transfers to or from external wallets may be reported by the facilitating platform if they fall within the scope of CARF reporting. While self-custody remains a legitimate choice for security and autonomy, it’s not a means to avoid tax transparency. When assets leave a platform, you should document transaction hashes, dates, asset types and values; if they subsequently re-enter a platform or are disposed of, continuity of cost basis must be preserved
• Location and platform choice can have cross-border consequences. Using a platform in a participating jurisdiction means your data will likely flow to HMRC automatically. Using a platform in a non-participating jurisdiction does not eliminate UK tax obligations and may carry additional compliance risk, particularly if HMRC receives other third-party data or on-chain analytics. UK residents remain taxable on worldwide gains and income; CARF simply enhances HMRC’s visibility
• Expect closer alignment between platform statements and HMRC expectations. Over time, HMRC may issue guidance on reconciling CARF reports with UK tax computations, including treatment of pooled cost basis, negligible value claims and the characterisation of airdrops, staking and liquidity pool rewards. While CARF does not itself define tax character, it supplies data that must be mapped to UK tax rules. Where the UK tax treatment remains nuanced, individuals may need to adjust reported CARF figures into UK-compliant computations, documenting methodology.

How to stay compliant

Ahead of full implementation, review your historic filings and data hygiene. If you have previously under-reported crypto disposals or income, consider whether a voluntary correction is appropriate.

For the current and future tax years, adopt consistent valuation practices at the time of each transaction and retain evidence of exchange rates used. If you interact with multiple platforms and wallets, institute a process to track inter-wallet transfers to avoid double-counting disposals or misallocating cost basis.

Be attentive to communications from your platforms. Requests to update tax residency or provide TINs are not optional; ignoring them can lead to erroneous reporting in your name or account limitations. If your tax residency changes, promptly inform platforms and maintain documentation supporting the timing and basis for the change.

In short, the UK’s implementation of CARF means that crypto platforms will become part of the mainstream tax reporting infrastructure, much like banks and brokers under CRS.

For individuals, the practical takeaway is simple: ensure your KYC details are accurate, keep meticulous records, report comprehensively and consistently on your returns and don’t assume that off-platform or crypto-to-crypto activity is invisible. Transparency is becoming the norm and aligning your practices accordingly is the most effective way to manage risk.