UK's Crypto Tax Crackdown Accelerates Ahead of CARF Implementation

HMRC sent over 81,000 warning letters to crypto investors in the UK last year, a significant increase from previous years. This rise in scrutiny comes as part of a broader trend, with more countries expected to join the OECD's Cryptoasset Reporting Framework (CARF) in 2027.

The CARF framework aims to automatically share crypto account information across jurisdictions, including the UK. Currently, 46 countries have committed to implementing this framework, with 29 more countries expected to join in 2028 and the US joining in 2029. HMRC has already begun collecting required information from UK-based crypto service providers since January 2026.

The UK's tax authority is also refining its approach to taxing decentralized finance (DeFi) activities. From April 2027, qualifying crypto lending and automated market-making arrangements will receive no-gain, no-loss treatment until an actual economic disposal occurs. This change could affect around 700,000 people in the UK.

HMRC's efforts are part of a broader global push to crack down on tax evasion in the crypto space. The authority recovered over £8.3 million through settlements in 2024-25 and 2025-26, with an average recovery per case increasing by approximately 73% from £12,500 to £21,600.