UK to Enforce CRS 2.0 and CARF Regulations: What Financial Institutions Need to Know

What Financial Institutions Need to Know About UK Tax Compliance

The UK has taken a significant step toward strengthening tax transparency and digital asset compliance with the introduction of two major regulatory updates: the International Tax Compliance (Amendment) Regulations 2025 and the Crypto-Asset Reporting Framework (CARF) Regulations 2025. Both have been laid before Parliament and will come into force on 16 July 2025, with reporting obligations commencing on 1 January 2026.

These changes will directly impact UK financial institutions, trustee-documented trusts, and crypto-asset service providers. They also form part of the UK's broader commitment to the OECD's international tax transparency standards.

CRS 2.0: What’s Changing in the UK Tax Compliance from January 2026?

The amended regulations implement CRS 2.0 (Common Reporting Standard Version 2.0), an updated framework developed by the OECD to improve the automatic exchange of financial account information across jurisdictions.

Key changes under CRS 2.0 UK include:

• Wider scope: CRS 2.0 extends the definition of reportable financial accounts to cover digital financial products, electronic money accounts, and central bank digital currencies (CBDCs).

• Enhanced due diligence: Reporting financial institutions must follow stricter procedures for identifying account holders and controlling persons, particularly in relation to non-cooperative jurisdictions.

• Mandatory registration: All reporting financial institutions and trustee-documented trusts in the UK will be required to register with HMRC under the new rules.

• Charity exemption: The updated regulations clarify that most charities are excluded from CRS obligations due to their low-risk tax profile.

• Reformed penalties: A new penalty framework aims to ensure enforcement is proportionate, targeted, and effective in deterring non-compliance.

  
  

Related search term: HMRC CRS 2.0 registration requirements

Crypto-Asset Reporting Framework (CARF): New Rules for Digital Asset Transparency

In parallel, the UK Government has introduced new crypto tax reporting rules through the Crypto-Asset Reporting Framework Regulations 2025 (SI 2025/744), which also take effect on 1 January 2026. This marks the UK's first formal implementation of the OECD CARF, a global standard for the automatic exchange of crypto-asset information between jurisdictions.

Under the CARF regulations, crypto-asset service providers in the UK will be required to:

• Collect and report user-level data on crypto-asset transactions, including exchanges and transfers.

• Conduct AML/KYC checks to verify customer identity and beneficial ownership.

• Report to HMRC annually, with information shared globally under existing tax information exchange agreements (TIEAs).

  
  

CARF applies to a wide array of digital assets, including cryptocurrencies, stablecoins, and some non-fungible tokens (NFTs).

Related search terms: Crypto tax reporting requirements UK 2026, UK implementation of OECD CARF

Key Compliance Dates

Date	Milestone
16 July 2025	CRS and CARF regulations come into force
1 January 2026	Effective date for CRS 2.0 and CARF reporting begins

Next Steps for Financial Institutions and Crypto Providers

Organisations impacted by these new rules—including UK financial institutions, trustee-documented trusts, and crypto exchanges—should begin preparations now. Key actions include:

• Reviewing internal systems and client onboarding procedures

• Ensuring readiness to meet HMRC CRS compliance obligations

• Implementing controls for crypto-asset due diligence and reporting

• Monitoring further guidance from HMRC ahead of the January 2026 deadline

Reference Regulations

• CRS Amendment Regulations 2025 – SI 2025/740

• CARF Regulations 2025 – SI 2025/744

With the adoption of CRS 2.0 and the introduction of CARF in the UK, the compliance landscape is evolving to keep pace with digital finance and international tax enforcement. Financial institutions and crypto-asset service providers must act now to assess their obligations and ensure systems are in place to support full compliance by 1 January 2026.