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The UK government has released a joint statement, along with 47 other countries, to implement new transparency and information sharing requirements in respect of crypto-asset platforms by 2027.
The Crypto-Asset Reporting Framework (CARF) is an OECD transparency standard agreed by multiple jurisdictions in March 2023. The joint statement published on 10 November solidifies the intention of signatories, including the UK, to implement that standard by 2027.
Crypto assets are assets that can be transferred using decentralised networks, most notably crypto currencies including Bitcoin. Use of these assets has increased in recent years. This rise in popularity has increased concerns about how to track and tax such assets, given that one of the key features of crypto assets is privacy, or anonymity.
The CARF will allow the automatic exchange of information on crypto exchanges between financial authorities, including the details of taxpayers that use crypto exchanges. This aims to help counter tax evasion where taxpayers have not disclosed or paid taxes due on holdings or disposals of crypto assets. HMRC has released public-facing guidance on the taxation of crypto assets, as well as a dedicated internal manual.
With the reduction in the annual exemption for capital gains tax (CGT) to £3,000 from April 2024, it is likely that more individual taxpayers will breach the threshold and must pay UK CGT on asset disposals. In light of the current UK tax rules on crypto-asset disposals, and the higher volume of transactions associated with crypto-asset investment, taxpayers may easily exceed these thresholds.
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