The UK has officially started one of its biggest crackdowns on crypto tax evasion. As of January 1, 2026, the government began enforcing the OECD’s Cryptoasset Reporting Framework (CARF), rules to prevent crypto tax evasion and improve transparency in the market.
Failing to obey the rule will result in a hefty fine and strict legal consequences.
UK Starts Crypto Tax Reporting Under OECD Framework
According to updates from the Organisation for Economic Co-operation and Development (OECD), the UK has begun enforcing the CARF, aiming to reduce tax evasion.
This new system requires crypto exchanges and platforms to collect and share detailed information, such as wallet activity, transaction history, and tax details, such as National Insurance numbers, with tax authorities.
In the UK, this data will be reported directly to HM Revenue & Customs (HMRC). Meanwhile, reports covering all crypto activity during 2026 must be submitted by May 31, 2027.
From 2027 onward, HMRC will also exchange this data with other CARF-participating countries, making it harder to hide crypto income overseas.
How Many UK Users Are Affected?
The UK is home to an estimated 6 to 7 million crypto users, roughly 10–12% of the adult population. Crypto ownership has grown quickly over the past few years, driven by Bitcoin, Ethereum, stablecoins, and DeFi platforms.
For many retail users, this is the first time crypto activity will be tracked at the same level as bank accounts.
The system mirrors earlier global banking rules that have helped governments recover billions of pounds in unpaid taxes since 2014.
Although it is important to note that no new crypto taxes have been introduced. In the UK, crypto gains are still taxed under existing rules, ranging from 10% to 24%, depending on income and tax category.
Penalties for Non-Compliance
If crypto users or platforms fail to follow the new tax reporting rules, penalties can be serious. Exchanges that provide incorrect user details or fail to report transactions may face fines of up to £300 per user.
For individuals, hiding crypto income or not reporting gains can lead to back taxes, added interest, and further penalties from HMRC. In serious cases, repeated non-compliance could trigger deeper investigations or legal action.
Global Push, Not Just the UK
The UK is not acting alone. 48 countries have already adopted CARF, and around 75 countries have agreed to join in the future. The United States is expected to apply these rules in 2028 and begin sharing data in 2029, showing how serious this global push has become.
Meanwhile, India already applies a 30% crypto tax and 1% TDS, making it one of the strictest crypto tax systems in the world.
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