HMRC Can Now See Your Crypto Trades: How CARF Reporting Works

London — The era of crypto flying under HMRC's radar is over, and it ended with paperwork rather than a raid. Since 1 January 2026, UK cryptoasset service providers — exchanges, wallet providers and other intermediaries — have been legally required to collect identity and transaction data from their users and report it to HMRC under the OECD's Cryptoasset Reporting Framework, known as CARF.

The first reports must be submitted to HMRC between 1 January and 31 May 2027, covering everything from 1 January to 31 December 2026. Which means the data trail for this calendar year is already being written, whether you've thought about your tax position or not.

What information gets reported?

More than most investors expect. Under the regulations, platforms must collect your full name, date of birth, home address, country of tax residence and tax identification number — for UK individuals, typically your National Insurance number. On the transaction side, reporting covers crypto-to-fiat conversions, crypto-to-crypto swaps, transfers between wallets, stablecoin transactions and, in some cases, payments made with crypto debit cards.

Note what's on that list. Swapping one token for another — the thing many investors still assume is invisible and tax-neutral — is both reportable under CARF and a disposal for capital gains tax purposes under existing HMRC rules.

There's a stick for users too: platforms can face penalties of up to £300 per user for non-compliance, which is why every UK exchange has spent the past few months emailing customers for tax residency details. Ignore those emails and you may find your account restricted; the platform has no choice.

Who sees the data?

HMRC first. Then, from 2027, other tax authorities. The UK is one of an initial group of 48 jurisdictions implementing CARF, and HMRC will automatically exchange information with participating countries — including all EU member states, the Channel Islands, Brazil, the Cayman Islands and South Africa. If you're a UK tax resident using an overseas exchange in a participating jurisdiction, that data flows back to HMRC just the same.

The old logic of "my exchange is offshore, HMRC will never know" was always shaky. From next year it's simply wrong.

What is HMRC doing with it?

HMRC hasn't waited for the first CARF reports to get aggressive. The tax authority trebled its "nudge" letters to around 65,000 suspected non-compliers in the 2024–25 tax year, and it already runs a dedicated voluntary disclosure facility for unpaid tax on cryptoassets. Once structured exchange data starts arriving in 2027, matching reported gains against actual platform records becomes close to automatic.

The honest read: the gap between what people owe and what people declare is about to become visible, and HMRC has built the machinery to act on it at scale.

What should you do now?

Three things, none of them complicated.

Respond to your platform's data requests, because accounts with incomplete tax information are the first to get frozen. Get your records straight for 2026 onwards — every disposal, every swap, valued in sterling at the time — since this is the first year HMRC will hold a copy of your activity. And if you have undeclared gains from earlier years, look seriously at the voluntary disclosure route before HMRC writes to you; penalties are consistently lower when you move first, and interest runs daily either way.

The capital gains exempt amount remains £3,000, so even modest profits are in scope. If your gains exceeded it in any recent year and you didn't file, that's the conversation to have with an accountant this summer — not after the first data exchange lands in 2027.