UK Extends the Cryptoasset Reporting Framework to Residents

Crypto service providers must report on transactions of UK users: the UK is extending the Cryptoasset Reporting Framework to residents, covering not only cross-border data exchange but also domestic purposes. As a result, the new regime will require UK-based and overseas cryptoasset service providers (RCASPs) that work with UK clients to collect and submit to HMRC structured data on transactions of UK resident cryptoasset users. The changes will be included in the Finance Bill 2025-26 and will take effect from the date of Royal Assent to that Bill and thereafter, while the secondary rules have already been adopted and will enter into force on 1 January 2026.

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What Exactly Changes for CARF and RCASPs

CARF is designed as a global system for exchanging tax information between jurisdictions on transactions involving cryptoassets. The core rules and commentary have been developed by the OECD and have already been implemented in UK law, but until now, they have not required UK RCASPs to collect data on the crypto activity of UK residents. The new measure closes this gap: RCASPs will now have to collect and submit information on UK resident customers to HMRC in the same way as for non-residents who fall within the scope of international exchange.

HMRC will receive CARF data on all UK taxpayers who use both UK- and non-UK-based RCASPs. This is a standardized dataset compiled annually that enables the tax authority to identify transactions involving cryptoassets, check the accuracy of declarations, and use this information for subsequent compliance activities. At the same time, HMRC can still exercise its existing powers to request information, but the additional layer of CARF data simplifies analysis and targeted oversight.

Legislative Framework and Timelines

Formally, the changes will be included in the Finance Bill 2025-26. The Bill will amend regulation 6 of "The Reporting Cryptoasset Service Providers (Due Diligence and Reporting Requirements) Regulations 2025 (S.I. 2025/744)" so that the scope of due diligence and reporting obligations covers users of cryptoassets who are UK residents or are controlled by persons who are UK residents. In parallel, the legislation will enshrine the powers of HM Treasury to maintain and, where necessary, update this regulatory framework.

The current package of rules for RCASPs was adopted on 25 June 2025 and will apply from 1 January 2026. The new measure effectively adds to the existing regime an additional segment of data on UK resident customers. In HMRC's description, it is emphasized that the impact on the budget (Exchequer impact) and on the macroeconomy is assessed as "negligible": this is more a strengthening of transparency and tax oversight than a fiscal reform with an immediate material revenue effect.

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Impact on Businesses, Users, and Equality

According to HMRC's assessment, the new obligation will affect around 50 businesses, which will have to update processes and software in order to include transactions of UK customers in their reporting. The additional costs are considered limited, since most IT expenditure for CARF implementation has already been incurred, and extending the dataset to UK residents adds only a relatively small incremental burden.

For individual users, the measure doesn't introduce new taxes or change existing filing obligations, but it increases the likelihood that HMRC will receive complete information on their cryptoasset transactions. At the same time, HMRC proceeds from the assumption that most RCASPs are corporate structures, and therefore the measure shouldn't result in a disproportionate impact on groups with protected characteristics.

Thus, extending CARF to UK resident cryptoasset users strengthens tax transparency and international cooperation on data exchange, while not creating high fiscal or operational costs for the Exchequer and for businesses. For crypto service providers, this is another step toward ensuring that work with UK clients is conducted under the same due diligence and reporting standards that are already in place for the traditional financial sector. Get more insights from our guides for beginners and professionals, and stay tuned for the latest updates and opportunities in the new economy, crypto industry, and blockchain developments!