UK Takes the Lead on Crypto Tax Transparency

The UK extends CARF to domestic reporting

Alex Speedie

May 28, 2025

The Crypto Asset Reporting Framework (CARF) is a new global system led by the OECD to improve how countries share information on digital assets like cryptocurrencies. The goal is to stop tax evasion in a fast-growing and often unregulated market. Although the OECD hasn’t confirmed when CARF will take effect globally, all 27 EU member states are set to start using it from 1 January 2026.

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The reason for CARF is clear. Tax authorities around the world are struggling to track gains from crypto trading. The IMF estimates that proper reporting of these gains could raise up to $100 billion a year in taxes globally. Some countries are already acting. India now charges a 70% penalty on hidden crypto profits. Italy has cut its tax threshold to zero, meaning even €1 of gains must be reported, and is raising its top tax rate on crypto from 26% to 42%. However, across the EU, rules vary widely. In Germany, for example, crypto gains are tax-free if assets are held for over a year.

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In the UK, around 12% of people now own crypto. At the same time, the capital gains tax (CGT) allowance has been cut from £12,000 to £3,000, and the tax rate has doubled from 10% to 20% for higher earners. HMRC has stepped up enforcement. In the 2023-24 tax year, investigations into unpaid CGT rose from 4,564 to 14,223, recovering £202.4 million in tax - up from £180.8 million the year before. With crypto ownership rising 40% year on year, unreported gains could cost the UK over £1 billion annually by 2030. But tracking crypto is harder than tracking money in banks, as there are no named accounts.

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To tackle this, the UK is going further than other countries by applying CARF to domestic reporting too. This means crypto firms in the UK will need to collect full personal details for every user, including name, address, date of birth, and tax ID and report all transactions, even wallet-to-wallet transfers. For the government, this could help close the tax gap. For the crypto sector, it could bring more legitimacy. Better rules could encourage big investors to enter the market. It also means crypto companies will need to hire more compliance and tax staff to keep up with new rules, especially with the EU applying CARF from 2026.

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As crypto becomes more mainstream, the industry may start attracting more experienced professionals. Compliance and risk functions will become more prominent, with crypto firms expected to ramp up hiring in these areas. Tax compliance in particular is an area which could become in demand with Accounting & Consulting firms also likely to benefit from these changes. Similarly, as the industry matures, talent flows are likely to follow, enhancing the calibre and credibility of firms operating in the space. Hence, business functions across HR, Marketing, Finance and others could well become more professionalised in how they operate.

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Finally, as crypto moves further into the mainstream, investment in the sector is expected to pick up. In 2024, blockchain-related deals totalled $2.99 billion, a 27% drop from the previous year, with the number of transactions falling nearly 17%, according to S&P Global Market Intelligence. Stronger regulation could help restore investor confidence and reverse that decline. With that, all eyes will be on 15 July, when the Chancellor is expected to unveil new financial services reforms. Crypto is expected to play a key role. The question is whether the UK can use regulation to become a global hub for digital assets.

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UK Takes the Lead on Crypto Tax Transparency

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