UK to Expand Crypto Reporting Rules for Residents by 2026

• The UK requires domestic crypto reporting for all resident users beginning in 2026.
• HMRC would gain automatic access to domestic and cross-border crypto data under CARF.
• UK’s proposal for DeFi taxation would defer capital gains until underlying tokens are sold.

The United Kingdom requires domestic crypto platforms to report all transactions from UK-resident users starting in 2026. This expansion brings domestic activity under the Cryptoasset Reporting Framework for the first time. The move gives His Majesty’s Revenue and Customs (HMRC) automatic access to a fuller data set before the start of global information sharing in 2027.

The Cryptoasset Reporting Framework (CARF), created by the Organization for Economic Co-operation and Development, sets out rules for the automatic exchange of crypto transaction data between tax authorities. It requires crypto asset service providers to conduct due diligence, verify user identities, and submit detailed yearly reports. 

UK Moves to Close Crypto Reporting Gaps

The original framework focuses on cross-border crypto activity. As a result, transactions that begin and end within the United Kingdom would not enter automatic reporting channels. HMRC confirmed this limitation in a policy paper released on Wednesday. The agency said the expansion is meant to close the reporting gap.

UK officials argued that domestic coverage is necessary to prevent crypto from becoming an asset class that falls outside existing transparency measures. They compared the need for visibility to the standards set by the Common Reporting Standard, which governs information sharing for traditional financial accounts. Authorities said the adjustment aligns both systems.

The government stated that the unified reporting model would ease the administrative load for crypto companies. Firms would no longer need to treat domestic and foreign transactions under separate rules. Officials said the change should create a consistent data framework and reduce errors that complicate tax assessments. 

HMRC said improved access to domestic and cross-border transaction data would strengthen compliance efforts. The agency plans to use the expanded data to identify underreported activity and assess tax obligations more accurately. 

Alongside the reporting update, the UK published a proposal for a “no gain, no loss” approach to decentralized finance activity. The adjustment would defer capital gains liabilities until users dispose of the underlying tokens. This would change the current system, which could trigger tax events when tokens are moved within DeFi protocols, even when users do not realize gains.

Global Moves Intensify Around Crypto Tax and Enforcement

Local crypto industry groups have generally supported the proposal. They said the new approach better reflects how decentralized finance platforms operate. They also said it reduces complexity for users who interact with multiple protocols for lending, swapping, or staking activities. The government would review feedback before finalizing the rules.

Related: UK to Roll Out Stablecoin Regime in Step With US, Says Official

Other countries are also adjusting their tax systems to address growing crypto adoption. South Korea announced new enforcement measures in October. The National Tax Service would seize cryptocurrency stored in cold wallets when it suspects tax evasion. Officials would also conduct home searches for hardware devices used to store digital assets.

Spain has proposed its own changes. The Sumar parliamentary group suggested raising the top tax rate on crypto gains to 47%. The plan would move crypto profits into the general income bracket. It would also apply a 30% flat rate for corporate holders. 

Switzerland announced a delay to the start of its automatic information exchange for crypto. The exchange would begin in 2027 rather than 2026. The government would first decide which countries it shares data with. The CARF rules would still enter Swiss law on January 1. 

In the United States, Representative Warren Davidson introduced the Bitcoin for America Act in November. The bill would allow Americans to pay federal taxes in Bitcoin. Payments would move into a national Bitcoin reserve. The proposal also classifies the transferred Bitcoin as neither a gain nor a loss, preventing capital-gains liabilities during payment.