The Crypto-Asset Reporting Framework (CARF) is one of the most significant global developments in crypto regulation to date. From 2026, exchanges and other crypto asset service providers around the world will begin automatically sharing investor transaction data with tax authorities, including HMRC. This is expected to significantly increase HMRC’s visibility over crypto activity.
This guide explains how the Crypto-Asset Reporting Framework (CARF) is expected to operate in practice, based on a detailed review of the OECD CARF schema and supporting documentation. It outlines the information that reporting crypto-asset service providers will collect, what HMRC is likely to receive, and how the framework may affect UK taxpayers with cryptoasset activity.
The aim is to provide a clear technical overview of what CARF covers, what it does not cover, and how the reporting framework may interact with HMRC compliance activity.
Contents
- 1. What CARF Is and Why It Matters
- 2. What Data Will Be Shared Under CARF
- 3. Which Platforms and Countries Are Covered
- 4. What CARF Does Not Do
- 5. How HMRC Might Use CARF Data
- 6. Practical Implications for UK Taxpayers
- Conclusion
- FAQs
- Appendix
- References
1. What CARF Is and Why It Matters
CARF is the OECD’s global standard for the automatic exchange of crypto-asset transaction data between tax authorities. It is similar in design to the Common Reporting Standard (CRS), which already covers bank accounts and financial assets, but applies specifically to crypto.
Under CARF, crypto-asset service providers (known as Reporting Crypto-Asset Service Providers or RCASPs) will be required to collect, verify and report information about their users and transactions each year. The data will then be exchanged automatically between participating countries.
The first reports are due to be exchanged by 31 May 2027, covering the 2026 calendar year. This means the framework will be in force from 1 January 2026.
Cryptoccountant’s view:
CARF brings crypto under the same type of international transparency rules that already exist for bank accounts. Once implemented, HMRC will routinely receive data from both UK and overseas platforms that have UK-resident customers.
2. What Data Will Be Shared Under CARF
CARF requires platforms to report both user identity information and transaction data. The information is collected annually and summarised by asset type and transaction category, rather than on a transaction-by-transaction basis.
2.1 User Information Reported
The user information reported to HMRC may include:
- Full name
- Address
- Date of birth
- Jurisdiction(s) of tax residence
- Tax Identification Number (for example, the user's National Insurance number for UK investors)
2.2 Transaction Data Reported
Transaction data will be aggregated by asset type and the following transaction categories:
- Crypto to fiat in
- Crypto to fiat out
- Crypto to crypto in
- Crypto to crypto out
- Transfers in
- Transfers out
- Transfers to unhosted wallets
The specific data reported in each of these categories is explained below.
2.3 Crypto to Fiat In/Out
Transactions involving crypto and fiat are recorded whenever a user acquires or disposes of a cryptoasset in exchange for government-issued currency such as GBP, USD or EUR. Under CARF, platforms must report these transactions in aggregated form for each asset type, with separate summaries for acquisitions (CryptoFiatIn) and disposals (CryptoFiatOut).
Data reported for crypto to fiat acquisitions or disposals:
- Asset (for example BTC, ETH, USDT)
- Total number of transactions during the reporting period
- Total number of units acquired or disposed of
- Total amount paid or received, expressed in fiat currency
Crypto to fiat disposals are taxable events under UK tax law, and the above information is likely to give HMRC sufficient visibility over the number and value of disposals without requiring full transaction-level trade data.
Example 1: How Crypto to Fiat transactions will be summarisedDuring 2026, John made 10 separate disposals of Bitcoin, selling 0.1 BTC each time and receiving £6,000 per transaction. He also disposed of 0.7 ETH for £3,000 and 0.8 ETH for £5,000. In addition, he acquired 10 SOL for £1,000 in a single transaction.
Under CARF, HMRC would receive the following aggregated data for John:
Crypto to Fiat Out
Asset No. of Transactions No. of Units Amount Received BTC 10 1 £60,000 ETH 2 1.5 £8,000 Crypto to Fiat In
Asset No. of Transactions No. of Units Amount Paid SOL 1 10 £1,000
In many cases, this may be sufficient for HMRC to identify inconsistencies between the disposal activity reported under CARF and the figures disclosed on a taxpayer’s return. In the example above, a complete absence of reported disposals despite significant CARF-reported activity may increase the likelihood of a compliance review.
2.4 Crypto to Crypto In/Out
Crypto to crypto transactions are reported when a user exchanges one cryptoasset for another. When a crypto swap happens, the platform must report these transactions in aggregated form for each asset type, with separate summaries for both sides of the swap: acquisition (CryptoToCryptoIn) and disposals (CryptoToCryptoOut).
Data reported for crypto to crypto acquisitions or disposals:
- Asset (for example BTC, ETH, USDT)
- Total number of transactions during the reporting period
- Total number of units acquired or disposed of
- Total fair market value paid or received for the asset
Crypto to crypto disposals are also taxable disposals under UK tax law, and transactions in this category are likely to provide HMRC with further visibility over taxable cryptoasset activity.
Example 2: How Crypto to Crypto transactions will be summarisedDuring 2026, Katie made the following swaps:
- 0.5 BTC for 3 ETH with a market value of £10,000
- 3 ETH for 0.6 BTC with a market value of £12,000
- 0.6 BTC for 3.5 ETH with a market value of £15,000
Under CARF, HMRC would receive the following aggregated data about Katie's activity:
Crypto to Crypto Out
Asset No. of Transactions No. of Units Amount Received BTC 2 1.1 £25,000 ETH 1 3 £12,000 Crypto to Crypto In
Asset No. of Transactions No. of Units Amount Paid BTC 1 0.6 £12,000 ETH 2 6.5 £25,000
Data relating to cryptoasset swaps may assist HMRC in identifying cases where disposal activity appears inconsistent with the disclosures made on a taxpayer’s return. For example, where significant crypto-to-crypto activity is reported under CARF but little or no disposal activity is declared for UK tax purposes, this may be treated as a risk indicator during HMRC’s compliance review processes.
2.5 Transfers
Transfers record the movement of cryptoassets into or out of a platform. Transfers are the most complex category of crypto activity in terms of CARF reporting, and there are three broad categories reported on:
- Crypto transfers in
- Crypto transfers out
- Crypto transfers out to an unhosted wallet
The information reported on varies substantially depending on the category of transfer.
Data reported for crypto transfers in:
- Asset (for example BTC, ETH, USDT)
- Total number of transactions during the reporting period
- Total number of units received
- Total fair market value of cryptoassets received
- Transfer type (one of nine categories: Airdrop, staking income, mining income, crypto loan, transfer from another exchange, sale of goods or services, collateral, other, unknown)
Data reported for crypto transfers out:
- Asset (for example BTC, ETH, USDT)
- Total number of transactions during the reporting period
- Total number of units transferred
- Total fair market value of cryptoassets transferred
- Transfer type (one of six categories: transfer to another exchange, crypto loan, purchase of goods or services, collateral, other, unknown)
The above information relating to inbound and outbound transfers is likely to provide HMRC with significant contextual information regarding a taxpayer’s cryptoasset activity, including indications of wallet movement patterns and potential crypto-derived income.
The third transfer category is outbound transfers to unhosted wallets. An unhosted wallet is a crypto wallet that is controlled directly by the user, rather than by a centralised platform or service provider, such as hardware wallets.
Data reported for crypto transfers to unhosted wallets:
- Asset (for example BTC, ETH, USDT)
- Total number of units transferred
- Total fair market value of cryptoassets transferred
In our view, this category may provide tax authorities with greater visibility over assets moving away from reporting platforms and into environments where activity is not directly captured under CARF, which could potentially be treated as a risk indicator for further review.
In respect of all transfer types, although a significant amount of detail is provided, they do not report wallet addresses or identify the counterparties involved:
Data not reported for transfers
- No destination or source wallet address information
- No identification of the receiving or sending party outside the reporting platform
By distinguishing inbound, outbound and outbound-to-unhosted transfers, together with classification of the nature of those transfers, CARF is likely to provide HMRC with a broad overview of how cryptoassets are being moved and whether crypto-derived income may exist.
The data is not designed to trace wallets, but it can highlight behaviour that may require further enquiry. For example:
- Inbound and outbound transfers broadly match: This may indicate movements between wallets controlled by the same taxpayer.
- Outbound transfers exceed inbound transfers: This could suggest transfers to third parties or platforms, which may involve taxable disposals depending on the underlying transactions.
- Inbound transfers exceed outbound transfers: This may indicate receipt of cryptoassets from third parties, which could represent income depending on the context.
- Significant transfers to unhosted wallets with limited declared disposals: This may prompt HMRC to consider whether the taxpayer is interacting with decentralised exchanges or other platforms that are not reporting under CARF.
- Evidence of crypto income without trading or miscellaneous income on your tax return: HMRC may consider whether taxable income has been omitted from the relevant return.
Although the crypto to fiat and crypto to crypto categories provide HMRC with the clearest link to taxable activity, the transfers category is likely to give HMRC valuable context about how assets are being used. In our view, a significant volume of transfer activity may increase the likelihood of HMRC scrutiny, particularly where the underlying nature of the transfers is unclear from the available reporting data.
3. Which Platforms and Countries Are Covered
The UK is one of more than 50 countries that have committed to implementing CARF. Any crypto-asset service provider that has a presence in a participating jurisdiction must report information about users who are tax resident in another participating country.
This means both UK and overseas exchanges may report data to HMRC where relevant. Even where activity takes place on non-UK platforms, information may still be exchanged with HMRC through international reporting arrangements between participating jurisdictions.
A full list of participating jurisdictions is included in the Appendix. We understand that a crypto-asset service provider will have a reporting obligation if it has a relevant presence or operation in a jurisdiction that has adopted CARF. This means it is not only the provider’s country of incorporation that matters. Many exchanges operate across multiple jurisdictions and may be subject to CARF obligations in more than one country.
4. What CARF Does Not Do
CARF significantly increases transparency, but it is not an all-seeing system. Several common assumptions about CARF are incorrect. These points help clarify what the framework does not cover.
No line by line transaction reporting
CARF does not provide HMRC with a full trade history. Platforms report activity in aggregate, grouped by asset type and transaction category. This means HMRC sees the number of disposals and the total value of those disposals, not each individual trade. CARF summarises activity rather than recreating a taxpayer’s full trading history.
No wallet addresses shared
CARF does not require platforms to report unhosted wallet addresses or identify the beneficial owner of a self-custodied wallet. Transfers to unhosted wallets are reported only as a category, with the asset, value and date. The receiving address is not reported. CARF is designed as a reporting regime, not a blockchain tracing tool.
No de minimis threshold
There is no minimum transaction size for CARF reporting. Even small transactions are included in aggregate totals. This means that modest or frequent disposals cannot escape reporting simply because they are low in value.
No historic reporting
CARF applies to activity from 1 January 2026 onwards. Platforms are not required to send historic data from earlier tax years. However, this does not mean that earlier transactions are out of scope for HMRC. If HMRC identifies inconsistencies or omissions in your post-2026 activity, whether through CARF or other sources, it can open an enquiry into earlier years where there is reason to believe that your returns were incomplete. In short, CARF does not retrospectively report historic activity, but it can still lead HMRC to ask questions about it.
5. How HMRC Might Use CARF Data
Once CARF reporting begins, HMRC is expected to use the data as part of its automated risk analysis. The information received from exchanges will allow HMRC to compare the scale of reported cryptoasset activity with the figures disclosed on a taxpayer’s return.
Automated risk assessments
CARF data is likely to be processed through HMRC's automated risk scoring systems, including Connect. These systems analyse large datasets to identify patterns of behaviour, assess the overall level of activity and assess levels of risk for each taxpayer. The purpose at this stage is not to identify specific errors, but to highlight cases where the volume or value of crypto activity suggests closer scrutiny may be appropriate.
Identifying returns that fall outside of expectations
HMRC is also likely to broadly compare the CARF data against the information reported in a taxpayer's Self Assessment return. If a taxpayer reports very low disposal figures, or no disposals at all, in the cryptoassets section of their tax return but their CARF data shows significant disposal activity, this may be treated as a risk indicator. These mismatches are likely to increase the chance of an enquiry. Where inaccuracies are identified, the level of any penalties will generally depend on factors such as behaviour, disclosure and cooperation. Our separate guide on HMRC crypto tax penalties explains how penalties are typically assessed.
Potential for nudge letters or enquiries
Where discrepancies are identified, HMRC may issue crypto nudge letters encouraging taxpayers to check or correct their historic returns. In higher risk cases, HMRC may open a formal enquiry. CARF does not replace these processes, but it strengthens HMRC's ability to identify taxpayers whose declared figures do not align with their reported activity.
Use of CARF data during a formal enquiry
In the event of a formal enquiry, HMRC may use CARF data to challenge the completeness and accuracy of a taxpayer's records. For example, an officer may point to aggregated disposal data for a particular asset and ask for evidence that those disposals have been properly reflected in the relevant return. CARF transfer data may also be used to test whether assets reported as transferred to self-custody are still held. For instance, if CARF shows that a taxpayer acquired 10 BTC and subsequently transferred it to an unhosted wallet, HMRC may request evidence that the balance remains intact and has not been disposed of without declaration. In this way, CARF strengthens HMRC’s ability to verify the accuracy of reported gains and the existence of cryptoasset holdings.
6. Practical Implications for UK Taxpayers
CARF closes the visibility gap that has long existed between crypto users and tax authorities. Once the system is live, HMRC will receive detailed transaction summaries directly from exchanges, including overseas platforms that have UK-resident customers.
This is likely to increase HMRC’s ability to identify inconsistencies between cryptoasset activity and reported tax positions. HMRC will be able to compare the information reported under CARF with a taxpayer’s Self Assessment return to identify potential discrepancies or unreported activity.
Taxpayers with historic cryptoasset activity that may not have been fully reported, or whose records may be incomplete, may wish to review their position before CARF reporting begins. For taxpayers concerned about historic disclosures or unreported cryptoasset activity, our guide to the consequences of not reporting crypto to HMRC explains the potential compliance, enquiry and penalty implications in more detail.
Conclusion
CARF represents the next major step in crypto regulation and tax transparency. It does not mean every wallet will be tracked on-chain, but it does mean that exchanges and custodians will become part of a global reporting network.
From 2027 onwards, HMRC is likely to have significantly greater visibility over UK cryptoasset activity reported through participating platforms. For most taxpayers, this is likely to reinforce the importance of accurate record keeping and complete disclosure.
Taxpayers with historic activity that has not been fully reviewed or reconciled may wish to assess their position before CARF reporting begins. HMRC’s existing crypto compliance activity, including nudge letter campaigns, may become increasingly targeted once CARF reporting data becomes available.
FAQs
CARF stands for the Crypto-Asset Reporting Framework. It is the OECD’s international reporting framework for the automatic exchange of cryptoasset transaction data between tax authorities.
CARF reporting begins with the 2026 calendar year. HMRC is expected to receive the first CARF reports by 31 May 2027 and will then receive reports annually thereafter.
No. CARF reporting begins from the 2026 calendar year, so only transactions taking place from 1 January 2026 onwards are expected to be included in the data exchanged between tax authorities. However, this does not mean that activity in earlier years falls outside HMRC’s scope. If HMRC has reason to believe that historic returns were incomplete, whether based on CARF data or other information sources, it may open an enquiry into earlier periods.
CARF data is exchanged annually. Reporting crypto-asset service providers prepare a yearly report covering relevant activity for the previous calendar year, which participating tax authorities then exchange with each other. HMRC is therefore expected to receive CARF data once per year, beginning with data relating to the 2026 calendar year.
HMRC is unlikely to review CARF data manually in most cases. The information received is expected to be analysed using automated systems, including HMRC’s Connect system, which already processes large volumes of data from banks, employers and financial institutions. CARF data may be compared against Self Assessment returns to assess whether the scale of reported cryptoasset activity appears broadly consistent with the taxpayer’s disclosures. Cases that fall outside expected patterns are more likely to attract further review.
No. CARF does not report acquisition costs or information relating to how or when cryptoassets were originally acquired. HMRC receives aggregated disposal values and transfer information only. CARF therefore cannot be used by itself to calculate capital gains accurately. Instead, the reporting data is more likely to be used as a compliance and risk assessment tool to compare reported activity against figures disclosed on tax returns.
Most decentralised exchanges are likely to fall outside the scope of CARF because they generally do not operate as intermediaries in the same way as centralised exchanges and may not collect or verify user identity information. However, this does not prevent HMRC from enquiring into wider cryptoasset activity. Significant outbound transfers or other indicators within CARF data may still prompt HMRC to consider whether activity is taking place through decentralised platforms.
In most cases, crypto exchange traded notes (ETNs) are unlikely to fall within the scope of CARF because they are traditional financial instruments rather than cryptoassets held directly on-chain. Instead, these investments may fall within existing financial reporting frameworks such as the Common Reporting Standard (CRS) or other financial account reporting obligations. The reporting treatment ultimately depends on the structure of the product and the applicable regulatory framework.
Appendix: CARF-Adopting Jurisdictions
The following countries have committed to implementing the Crypto-Asset Reporting Framework (CARF) and may share data with HMRC for UK tax purposes:
Jurisdictions undertaking first exchanges from 2027 with data starting from 1st January 2026:
- Austria
- Azerbaijan
- Belgium
- Bermuda
- Brazil
- Bulgaria
- Canada
- Cayman Islands
- Colombia
- Croatia
- Cyprus (Greek Cypriot part of the Island)
- Czechia
- Denmark
- Estonia
- Faroe Islands
- Finland
- France
- Germany
- Gibraltar
- Greece
- Guernsey
- Hungary
- Iceland
- Indonesia
- Ireland
- Isle of Man
- Israel
- Italy
- Japan
- Jersey
- Kazakhstan
- Korea
- Latvia
- Liechtenstein
- Lithuania
- Luxembourg
- Malta
- Mexico
- Netherlands
- New Zealand
- Norway
- Poland
- Portugal
- Romania
- San Marino
- Slovak Republic
- Slovenia
- South Africa
- Spain
- Sweden
- Switzerland
- Uganda
- United Kingdom
Jurisdictions undertaking first exchanges from 2028:
- Bahamas
- Barbados
- British Virgin Islands
- Costa Rica
- Hong Kong
- Kenya
- Malaysia
- Mongolia
- Nigeria
- the Philippines
- Saint Vincent and the Grenadines
- the Seychelles
- Singapore
- Thailand
- Türkiye
- United Arab Emirates
- the United States
Jurisdictions that have not yet committed to implement the CARF:
- Argentina
- Australia
- El Salvador
- India
- Panama
- Vietnam
