HMRC can now see your crypto: what CARF means and what to do before the letter arrives

From 1 January 2026, UK crypto exchanges and custodial wallet providers are legally required to collect their customers’ identity and transaction data and report it to HMRC under the Cryptoasset Reporting Framework. The first reports covering all of 2026 land with HMRC between January and May 2027. If you have crypto gains you have never declared, the clock is now running.

What exactly gets reported

• Your full name, date of birth, address and tax identification number, usually your National Insurance number.
• Crypto-to-fiat conversions, so every time you cash out.
• Crypto-to-crypto swaps, which most people do not realise are taxable disposals.
• Transfers between wallets and, in some cases, payments made with crypto cards.

This is not just UK exchanges. CARF is an international standard adopted by dozens of countries, so overseas platforms report too, and tax authorities exchange the data with each other.

The letter that follows

HMRC’s favourite tool is the nudge letter: a polite note saying they have information suggesting you may have undeclared crypto income or gains, inviting you to correct your affairs. They sent around 65,000 of them to suspected non-compliers in the 2024/25 tax year alone, and that was before CARF data started flowing. The letters are polite. What follows if you ignore them is not.

The three most expensive misunderstandings

• “I never withdrew to my bank, so there is nothing to tax.” Wrong. Swapping one coin for another is a disposal for Capital Gains Tax, whether or not pounds ever appeared.
• “It was years ago.” HMRC can go back four years for innocent errors, six for carelessness, and up to twenty where they consider it deliberate.
• “My gains were small.” Perhaps, but the annual CGT exemption is now only £3,000, and staking rewards or airdrops may count as income, not gains.

What to do before the letter arrives

Get your full history reconciled across every exchange and wallet, including closed accounts, and work out what you actually owe, which after losses and allowances is often less frightening than people fear. If past years need correcting, a voluntary disclosure made before HMRC contacts you keeps penalties at the lowest possible level and takes the anxiety out of every brown envelope.

This is exactly what our crypto and trading service does: specialist software reconciliation, correct treatment of DeFi, staking and NFTs, and disclosures handled from start to finish. Talk to us before HMRC talks to you.

Want a number before you talk to anyone? Our free crypto CGT calculator estimates your 2026/27 bill in seconds, including what your losses are worth.