HMRC Crypto Tax Checks Increase as CARF Reporting Begins

HMRC Steps Up Crypto Tax Compliance Checks as Reporting Rules Tighten

HMRC is increasing its focus on cryptoasset tax compliance, while new reporting rules are giving tax authorities greater visibility of cryptoasset activity.

According to figures recently reported, HMRC sent over 80,000 crypto-related compliance letters in the tax year ending 5 April 2026. These letters commonly encourage recipients to review their tax affairs and correct any undeclared income or gains. A compliance letter does not necessarily mean that HMRC has opened a formal enquiry or concluded that additional tax is due, but it should not be ignored. 

At the same time, the UK’s Cryptoasset Reporting Framework regulations came into force on 1 January 2026. Relevant cryptoasset service providers are now collecting reportable information, with the first reports covering the 2026 calendar year due to HMRC by 31 May 2027.

Crypto tax can arise without withdrawing cash

One of the most common misconceptions is that crypto tax only becomes relevant when funds are transferred to a bank account.

In reality, HMRC treats several activities as disposals for Capital Gains Tax purposes. These include selling tokens, exchanging one token for another, spending tokens on goods or services and giving tokens away, subject to certain exceptions. Moving tokens between wallets under the same beneficial ownership is not normally a disposal. 

Depending on the circumstances, tax implications can arise from:

• swapping one cryptocurrency for another
• receiving staking rewards
• mining activities
• receiving or disposing of airdropped tokens
• buying, selling or exchanging NFTs
• DeFi lending, liquidity provision and yield farming
• spending cryptoassets
• gifting cryptoassets, although different rules can apply to gifts to a spouse, civil partner or charity.

The precise treatment will depend on what happened and why. Some transactions may generate taxable income, while others may produce a chargeable gain or allowable loss.

For example, HMRC says staking rewards can be taxable as trading income or miscellaneous income, depending on the nature of the activity. A later disposal of the rewarded tokens may also require a Capital Gains Tax calculation. 

DeFi arrangements can be particularly complex. The treatment may depend on the contractual terms, the tokens received and whether beneficial ownership passes to a borrower or platform. In some structures, depositing or lending the tokens can itself create a disposal. 

Why accurate crypto records matter

For investors with activity across several exchanges, wallets, blockchains and DeFi protocols, calculating the correct figures can be challenging. Records may need to distinguish taxable disposals from transfers between the investor’s own wallets, while also identifying costs, fees, income and sterling values at the relevant dates.

Tax software can assist, but its output will only be reliable if the transaction data is complete and each activity has been classified correctly.

What to do about undeclared crypto tax

Charlton Baker’s specialist Crypto Tax team supports investors, traders and businesses with cryptoasset tax reviews, transaction analysis, Capital Gains Tax calculations, Income Tax reporting and HMRC disclosures.

From a straightforward portfolio review to the reconstruction of thousands of transactions across multiple wallets and exchanges, our team can help establish what needs to be reported and provide confidence that your crypto tax position is being handled correctly. Give us a call now on 01380 723692 or email here.