Navigating CARF: Ensuring compliance with HMRC’s Crypto Reporting Framework

29 July 2025

From 1 January 2026, the UK will begin enforcing the Cryptoasset Reporting Framework (CARF) – a global initiative designed to increase tax transparency and clamp down on unreported crypto activity.

While this may seem like a change aimed at crypto platforms, the real impact will be felt by individuals who have invested in cryptoassets without declaring them to HMRC.

What’s changing?

Under CARF, cryptoasset service providers (such as exchanges and wallet platforms) will be legally required to collect and report detailed information about their users and their transactions. This includes:

Full personal details (name, address, date of birth, tax ID)
Transaction history (type of cryptoasset, number of units, value, and nature of the transaction)
Tax residency information

This data will be shared with HMRC and other tax authorities globally, giving them visibility into crypto activity.

Why this matters

If you’ve bought, sold, or received crypto in any form and haven’t reported it to HMRC, you could be at risk of significant financial penalties. HMRC will use the data gathered through CARF to identify individuals who may have underreported or failed to disclose crypto-related income or gains.

Once HMRC contacts you, it becomes a “prompted disclosure”, which means:

Higher penalties – up to 200% of the tax due
Interest charges – currently at around 8.25%

Voluntary Disclosure: Why this is a smart move

The best course of action is voluntary disclosure. Disclosing this information before HMRC contacts you often leads to far more lenient treatment, resulting in:

Reduced penalties
Lower interest charges
More favourable terms for repayment

How can Affinia help?

At Affinia, we have experience in supporting clients navigate complex tax issues, including historic crypto activity. If you’re unsure whether your crypto investments have been accurately reported or if you know they haven’t – speak to us today.