08-05-2026 
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The United Kingdom’s tax authority, HM Revenue & Customs (HMRC), has pulled in over £8 million ($11 million) since 2024 from settlements with 502 digital asset investors arising from unpaid taxes, according to a recent Freedom of Information (FOI) request.
- U.K. tax authority sees millions in tax settlements from digital currency investors
- Standards for tax settlements for the future of U.K. regulatory framework
- What tax obligations face U.K. digital currency investors?
- The obstacles in the U.K. digital currency landscape
- Ways to boost compliance and cut tax deficits
- The significance of tax settlements for U.K. regulatory pathways
Based on figures published July 24 by financial services compliance provider Identomat—which made the FOI request—the settlements resulted from “voluntary disclosures” over the past two years, as U.K. digital currency investors and firms gradually attempted to get themselves compliant with the more stringent reporting requirements of the Crypto-Asset Reporting Framework (CARF), an international standard for tax reporting and data exchange created in 2023.
In November 2023, HM Treasury declared its intention to deliver CARF, after which HMRC began inviting disclosures of unpaid taxes relating to exchange tokens, non-fungible tokens (NFTs), and utility tokens.
Under HMRC guidance, a disclosure should set out how the taxpayer proposes to cover the tax owed, plus penalties and interest, with the authority free to accept or reject the offer. The FOI data released to Identomat gives the first full-year snapshots of the settlements resulting from these disclosures, since November 2023.
It revealed that 280 individuals came forward in 2024/25 and reached settlements, with the total value recorded at £3,543,387 ($4,710,631). In 2025/26, the number of settlements fell to 222, but the total value climbed to £4,784,745 ($6,360,911). This put the total value of settlements over the past two years at £8,328,132 ($11,069,877).
Meanwhile, average settlements through disclosure climbed from £12,654 ($16,822) in 2024/25 to £21,552 ($28,651) the following year, and over the two-year period, average settlements resulting from disclosure stood at £16,589 ($22,053).
In its FOI response, HMRC said that settlements can “vary significantly,” while adding that voluntary disclosure was just one route by which it addresses digital currency tax liabilities.
“HMRC uses a range of approaches to identify and address potential non-compliance in relation to cryptoassets, including enquiries, data analysis and targeted interventions such as nudge campaigns,” read the response. “The figures should therefore be considered in that wider compliance context.”
For example, HMRC said it sent “nudge letters” to approximately 100,000 individuals “nudge letters” suspected of evading tax on digital asset gains during the two-year period.
According to Identomat, the voluntary disclosures and resulting settlements are part of a broader compliance crackdown by the tax authorities, which has significant implications for both digital asset investors and the platforms they use.
“Platforms must collect each customer’s name, address, date of birth, tax residence, National Insurance number or tax reference, and a summary of their crypto transactions—and report all of this to HMRC or face fines,” said Identomat COO Zurab Kotaria, in a statement to CoinGeek. “Non-compliant platforms can face fines of £300 per user record for missing or inaccurate reports, which can quickly clock up to millions of pounds for larger platforms.”
The new mandatory ID checks that come with CARF mean digital asset platforms are expected to share more customer information with authorities than ever before—or face losing their licenses.
A new global standard
CARF was developed by the Organisation for Economic Co-operation and Development (OECD)—a global institution that promotes policies to improve world trade and economic progress—as a global tax transparency initiative designed to set a standard for tax reporting and improve the exchange of information between countries on digital asset transactions, to combat tax evasion and avoidance.
CARF applies to so-called ‘Reporting Cryptoasset Service Providers (RCASPs),’ which covers digital asset exchanges, wallet providers, brokers, and intermediaries.
Under the rules, RCASPs must carry out due diligence on users, collect self-certifications and tax residency details, identify reportable users across jurisdictions, and report digital asset transactions annually to tax authorities. Each report must include the type of digital currency—including stablecoins, NFTs, and tokenized assets—the transaction value, and the nature of the transaction, such as transfers or exchanges.
Once collected by a nation’s tax authority, this information can then be exchanged freely with other countries that have also signed up to CARF, in order to reduce tax evasion via global digital asset markets.
As of June 2026, the OECD said that 76 jurisdictions had committed to the rules, including “the vast majority” of digital asset centers. 46 jurisdictions are committed to undertaking their first exchanges by 2027, amongst them every Nordic and European Union nation (barring Cyprus), Japan, South Korea, Brazil, and the U.K.
In terms of the latter, having already declared its intention in 2023 to implement CARF, the U.K. officially adopted the rules on January 1 of this year and is now in the process of collecting the data necessary to meet the 2027 exchange date.
According to HMRC, CARF now requires U.K. digital asset firms to collect information in relation to in-scope transactions, on an annual basis, including on the activities and tax residency of their users.
“This information will be sent to HMRC whereafter information on non-U.K. users will be exchanged with jurisdictions who have also implemented the CARF,” stated the tax authority. “The data collected and received from other jurisdictions will be used to tackle tax evasion, avoidance and help customers to meet their tax obligations.”
However, the increased reporting obligations only explain why investors and digital currency platforms are coming forward with more tax data; they don’t explain why so many U.K. digital asset investors have been underpaying their taxes in the first place, to the tune of £8 million ($11 million).
Why might UK digital currency investors owe tax?
Under U.K. tax law, disposing of digital currencies—such as selling them for fiat currency, exchanging one digital currency for another, spending them, or, in some cases, gifting them—can trigger a Capital Gains Tax (CGT) liability. Individuals receive an annual CGT exempt amount of £3,000 ($3,988), and net gains above that amount are generally taxed at 18% or 24%, depending on the individual’s taxable income.
As explained by U.K. accountancy firm Grunberg: “The primary objective of CARF is to enforce tax compliance. Businesses dealing in crypto assets should be aware that any gains made from these assets are subject to taxation, similar to gains from other investments.”
In the circumstances where HMRC considers an individual’s digital asset activity to constitute a trade, rather than an investment, profits may instead be subject to Income Tax and National Insurance contributions.
However, this is rarer as the tax authority generally treats individuals who buy and hold digital assets, even where they make frequent disposals, as investors subject to CGT rather than as traders—a trading classification is more likely where the activity has the characteristics of a financial trade, such as a high level of organization, commercial intent, and activity resembling a business operation.
Whatever their trading and investment habits, individuals are responsible for reporting taxable digital asset gains and income to HMRC, usually through Self-Assessment.
Which means, either those 502 digital asset investors who voluntarily disclosed their unpaid taxes, along with the further 100,000 that received HMRC nudge letters, were not aware of the CGT and trading rules in relation to digital currency, or they didn’t foresee their CASP handing over their data to the tax authority—and thus thought they’d get away without paying the appropriate tax.
For CASPs, the decision to comply with the CARF obligations is a no-brainer, as underscored by Identomat COO Kotaria, who pointed out that: “Overlapping anti-money laundering rules mean non-compliant platforms face additional penalties from the Financial Conduct Authority (FCA), including removal from the Cryptoasset Register, triggering a requirement to cease trading.”
He cited the example of how leading digital asset exchange Coinbase (NASDAQ: COIN) was fined £3.5 million ($4.65 million) in 2024 for weak onboarding controls, specifically “repeatedly breaching a requirement that prevented the firm from offering services to high-risk customers.” Although unrelated to CARF reporting directly, this illustrates U.K. regulators’ broader willingness to penalize weak compliance controls.Nevertheless, for U.K. digital asset firms, compliance with the new standards is often easier said than done.
The challenge for the UK digital currency space
The U.K. is moving ever closer to a full regulatory framework for digital assets, with the Financial Conduct Authority (FCA)—the body responsible for setting and overseeing the U.K.’s digital currency rules—having finally published its long-awaited digital asset rules this June, after a three-year consultation period that concluded June 3.
According to the FCA, firms can apply for authorization between September 30, 2026, and February 28, 2027, so they are ready to start or continue trading under the new regime when it comes into force on October 25, 2027.
While the rules may be finalized and the date set, the wait goes on for the regime to be implemented, meaning the current status quo continues.
Up until the U.K. adopted the CARF rules, the only notable pieces of regulation governing the digital asset space in the country were the AML rules and the financial promotion regime, the latter of which received harsh criticism from some in the digital asset industry for its implementation.
Under the MLRs, registered digital currency exchange providers and custodian wallet providers must carry out customer due diligence (CDD), including identifying and verifying customers, assessing money laundering and terrorist financing risks, applying enhanced due diligence for higher-risk customers, monitoring transactions, maintaining records, and reporting suspicious activity.
Essentially, firms must maintain accurate customer information and undertake ongoing, risk-based monitoring and reviews.
However, AML rules are designed primarily to prevent financial crime rather than create a comprehensive tax-reporting database. Many digital currency businesses also grew rapidly before the AML registration regime became operational in 2020–21, leaving firms with legacy accounts, incomplete documentation, customers whose tax residence had changed, and records created under earlier verification standards.
With the OECD’s CARF taking effect in the U.K. this January, CASPs were required to collect a broader, more tax-focused set of customer information, including tax residence and taxpayer identification numbers (TINs), to identify reportable users and support automatic information exchange.
In other words, customers who had already been fully verified for AML purposes could still lack information required under CARF, leading to a significant remediation exercise for firms with large numbers of legacy customers.
As explained by Kotaria: “The emerging compliance regime presents significant operational challenges for crypto platforms, many of whom are starting with a blank sheet. The task of verifying the identities of millions of existing customers who may have registered in an era of light-touch regulation, combined with the challenge of onboarding of new investors, more often than not requires new tech infrastructure.”
Recognizing these practical challenges, industry participants have urged HMRC to adopt a proportionate approach that encourages compliance while reducing unnecessary administrative burdens.
How to improve compliance and reduce unpaid taxes
In response to a 2024 consultation by HMRC on its proposed implementation of CARF, the digital asset trade association CryptoUK offered recommendations to help avoid reporting errors under the new rules.
“Additional guidance will be useful and necessary to aid RCASPs who wish to be compliant,” said CryptoUK. “Problems will arise, similar to those for taxpayers engaging in traditional, non-cryptoasset transactions particularly how to verify UK tax residence (or not).”
For taxpayers, it recommended further education on setting up and using the Government Gateway U.K. personal or business online tax accounts, as well as streamlining the process of granting taxpayers a certificate of residence. While for CASPs, the association suggested rules that permit them to forego self-certification requirements if certain specific and narrow circumstances for pre-existing customers and accounts are met, namely: the pre-existing account is below a specific threshold; if all data collected for the client indicates a specific country of residence; and if the CASP already has the data needed to report under current CARF requirements.
Beyond these suggested rule changes, CryptoUK also pleaded for leniency based on whether a lack of compliance is the result of mistake or malice aforethought.
“RCASPs that are appropriately supported by HMRC guidance and tools and engage in best endeavours to comply should be treated differently than those that are willingly negligent or deceptive about compliance,” argued CryptoUK.
It also highlighted concerns that customers of U.K. digital asset companies may not understand why they are required to provide certain, more detailed information, or may believe the request for additional personal data is part of a phishing attack.
Therefore, “by informing the public of the new requirements, and continuing to be proactive in communications, HMRC can create an environment where providing the required information is a more straightforward exercise for taxpayers and CASP,” suggested the trade association.
What the tax settlements mean for UK regulation’s direction of travel
The £8 million-plus ($11 million-plus) recovered through voluntary settlements may be modest when compared with the overall size of the U.K.’s digital asset market—which some estimates put at £240 billion ($323 billion)—but it represents an important shift in how digital currency taxation is likely to be enforced going forward.
For years, HMRC relied largely on taxpayer disclosures, targeted inquiries, and information requests to identify undeclared digital asset gains. CARF significantly changes that dynamic by creating a standardized reporting framework that gives tax authorities access to far more comprehensive transaction and taxpayer data, both domestically and through international information sharing, starting in 2027.
As a result, investors who previously believed their digital asset activity was less visible to HMRC are increasingly being encouraged to get their tax affairs in order before discrepancies are identified through automated reporting.
At the same time, CASPs are being drawn further into the tax compliance ecosystem, requiring them to balance new reporting obligations with customer onboarding, privacy expectations, and existing AML requirements.
For HMRC, the goal is not just stronger enforcement, but also to catch people out and secure further settlements. Rather, the regime’s success will also depend on providing clear guidance that enables both taxpayers and firms to comply without unnecessary friction.
If implemented effectively, CARF is likely to shift the focus of digital asset taxation away from retrospective investigations and towards routine, data-driven compliance—bringing digital assets closer to the reporting standards that already apply across traditional financial markets.
In this regard, at least, it is in keeping with a broader move towards integration over separation reflected in the U.K.’s emerging regulatory approach to digital assets and the FCA’s proposed framework—expected to come into force in October 2027—which seeks to incorporate digital currency activities into existing U.K. financial services regulation, supplemented by some targeted rules where digital currency-specific risks require them.
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