TL;DR — Yes. HMRC has already used its formal information powers to gather data on UK users of major crypto exchanges, and from 1 January 2026 that picture changes entirely: under the UK's new Cryptoasset Reporting Framework (CARF), UK-based Reporting Crypto-Asset Service Providers (RCASPs) — and overseas providers in participating CARF jurisdictions — will be required to collect and report UK-user data each year, with the first reports due by 31 May 2027. If you have traded on Binance and not declared the gains, the window to come forward voluntarily is closing.
This guide covers what HMRC already knows, exactly what changes under CARF, the practical steps if you have undeclared gains, and how to work out what you owe. It reflects HMRC and OECD positions as of May 2026.
Disclaimer
This guide is intended as a generic informative piece. This is not accounting or tax advice that can be relied upon for any UK individual's specific circumstances. Please speak to a qualified tax advisor about your specific circumstances before acting upon any of the information in this article.
Does Binance currently share data with HMRC?
HMRC has had powerful legal tools to obtain user data from financial service providers — including overseas crypto exchanges — for years. Under Schedule 23 of the Finance Act 2011 (bulk data-gathering) and Schedule 36 of the Finance Act 2008 (information and inspection powers — individual notices), HMRC can compel third parties to hand over transaction information about UK residents.
The only major UK-facing exchange to have publicly confirmed cooperation is Coinbase, which in 2021 disclosed UK user data for accounts that had transacted more than £5,000 in crypto. Binance has not publicly confirmed whether it provided UK user data in response to HMRC information notices — but the scale of HMRC's nudge-letter activity (more on that below) makes it reasonable to assume HMRC holds significant exchange data on UK users, regardless of which specific exchanges supplied it.
What changes from 1 January 2026: the Cryptoasset Reporting Framework
The Cryptoasset Reporting Framework (CARF) is an international reporting standard developed by the OECD. The UK has legislated CARF into domestic law through The Reporting Cryptoasset Service Providers (Due Diligence and Reporting Requirements) Regulations 2025, and the rules apply from 1 January 2026. (For background on the OECD framework itself, see our earlier post on the OECD's release of CARF.)
Before CARF, HMRC's access to exchange data relied on case-by-case information notices — effective but reactive. CARF replaces that with a systematic annual reporting obligation that applies to every qualifying crypto exchange and service provider with UK customers.
The framework is the crypto equivalent of the Common Reporting Standard (CRS) — the same mechanism that automatically exchanges offshore bank-account data between more than 100 countries. CARF does for crypto what CRS did for offshore banking: it closes the information gap that allowed undeclared activity to go undetected.
What information will Binance report to HMRC under CARF?
Each Reporting Crypto-Asset Service Provider must collect and report the following for every UK-resident user:
Identity data:
- Full name
- Date of birth
- Home address
- Country of tax residence
- National Insurance number or Unique Taxpayer Reference (UTR)
Transaction data:
- Type of transactions (exchanges, transfers, purchases)
- Aggregate value of transactions across the reporting year
- Number of units transacted and the type of crypto asset involved
Reports submitted to HMRC will then be shared internationally with other tax authorities that adopt CARF, so UK residents using foreign exchanges and foreign residents using UK exchanges all come into scope from 2027 onwards. Failure by an RCASP to comply attracts penalties of up to £100 per user for inaccurate or incomplete reports under the 2025 Regulations.
When will HMRC first receive Binance data under CARF?
- 1 January 2026 — Data collection begins. Every qualifying exchange (including Binance, while it continues to serve UK customers) must start gathering and recording the prescribed data on UK-resident users.
- 31 May 2027 — First reporting deadline. Exchanges submit their reports to HMRC covering the 2026 calendar year.
- From 2027 onwards — International exchange of CARF data with other adopting countries begins.
In practical terms: for the 2026/27 tax year (6 April 2026 to 5 April 2027), HMRC will begin receiving annual automated reports covering reportable Binance activity to compare against your Self Assessment return.
Why has HMRC been sending nudge letters about crypto?
An HMRC nudge letter is an informal prompt — not an investigation or formal enquiry — asking you to review your tax affairs and correct any errors. The letter typically says HMRC holds information suggesting you may have crypto activity that wasn't declared on your Self Assessment.
The numbers tell the story:
- 2024/25 tax year: 64,982 nudge letters sent to individuals suspected of owing tax on crypto.
- 2023/24 tax year: 27,713. That's a 134% year-on-year increase.
- Source: UHY Hacker Young Freedom of Information request.
Nudge letters are sent in bulk based on data matching. If HMRC received information about your Binance account — through a voluntary data request, an information notice, or another channel — and that data didn't match what you declared, a letter was likely to follow.
Receiving a nudge letter does not mean you are under formal investigation. But ignoring one significantly increases that risk. HMRC gives nudge-letter recipients the opportunity to correct their returns voluntarily — and voluntary correction typically attracts lower penalties than an HMRC-initiated enquiry. If you have had a letter about Binance or any other exchange, see our guide on what to do if you receive a HMRC nudge letter about your crypto.
What should I do if I have undeclared Binance gains?
If you have traded on Binance and not declared gains or income, the most important thing is to act before HMRC contacts you formally. Voluntary disclosure almost always results in lower penalties than waiting for an enquiry.
There are three steps:
1. Calculate what you owe. You'll need a complete record of every Binance transaction — purchases, sales, swaps, and any crypto received as income (staking rewards, referral bonuses, and similar). From that data, you calculate capital gains under HMRC's share-pooling rules (the Section 104 pool) and any income tax owed on crypto received.
2. Tell HMRC. Self Assessment returns can be amended online for up to 12 months after the filing deadline (so a 2024/25 return filed by 31 January 2026 can be amended until 31 January 2027). For earlier undeclared years that are now closed for amendment, the dedicated HMRC route is:
- HMRC's dedicated Cryptoasset Disclosure Facility — launched in November 2023, this is the purpose-built online route for unpaid Income Tax or Capital Gains Tax on cryptoassets.
3. Pay the tax owed. Interest applies to any late payment, and depending on the circumstances, a penalty may also be charged. Penalties are lower for prompted disclosures (where HMRC has made contact) and lower still for unprompted disclosures (where you come forward first).
We're unable to advise on your specific situation. A qualified accountant can guide you through the disclosure process and minimise your exposure — find a Recap-verified UK crypto tax specialist.
How do I calculate what I owe on my Binance trades?
Calculating crypto gains in the UK is more involved than simply subtracting what you paid from what you received. HMRC requires you to use share pooling — specifically the Section 104 pool — which averages the cost of all units of an asset acquired over time. The rules sit in HMRC's Cryptoassets Manual at CRYPTO22000, and you can read our plain-English walkthrough in how to value crypto for UK tax.
Two matching rules take priority over pooling:
- The same-day rule — if you buy and sell the same asset on the same day, those transactions are matched against each other before going into the pool.
- The 30-day rule (bed and breakfasting) — if you sell an asset and rebuy it within 30 days, the sale is matched against the repurchase rather than the pool. See our full guide to the 30-day bed and breakfast rule for crypto.
These rules apply to every disposal — including swapping one crypto for another and spending crypto. Transfers between wallets you own and control are not disposals (though network fees paid in crypto are treated as a small disposal of the fee asset).
Example: Sarah's BTC trades on Binance
Sarah is a UK basic-rate taxpayer. In 2024 she bought 0.5 BTC on Binance for £8,000 (so a cost basis of £16,000/BTC). In March 2025 she bought another 0.5 BTC for £14,000 (£28,000/BTC). Her Section 104 pool now holds 1 BTC at an average cost of £22,000.
In April 2025, Sarah sells 0.3 BTC for £15,000. To calculate the gain:
- Allowable cost from the pool: 0.3 × £22,000 = £6,600
- Proceeds: £15,000
- Capital gain: £8,400
After the disposal, Sarah's Section 104 pool holds 0.7 BTC at the same £22,000 average cost basis. Her £8,400 gain is above the 2025/26 £3,000 annual exempt amount, so the excess £5,400 is taxable at her CGT rate. At basic rate that's 18% × £5,400 = £972 of CGT owed.
This is the simplest possible case — most Binance users have hundreds or thousands of transactions across multiple assets, with same-day and 30-day matches scattered throughout. For deeper coverage of the pool mechanics, see our crypto cost basis guide and the UK crypto tax guide.
Doing this manually across a Binance transaction history is error-prone and time-consuming. The alternative is to import your Binance history into Recap, which applies HMRC's share-pooling rules automatically, handles the same-day and 30-day matching correctly, and produces a downloadable tax report ready for your Self Assessment.
A founder's view on CARF
Daniel Howitt, Recap's co-founder and CEO, has been engaged with CARF since the OECD first proposed the framework in 2022:
These compliance measures are the next iteration of CRS that already captures assets like stocks and shares. CARF is just an evolution of CRS, but for cryptoassets — which shows how far the asset class has come.
The practical implication for UK investors is that the era of unreported crypto is closing. The technical groundwork is now legislated, the data flows begin in January 2026, and from May 2027 HMRC will be cross-referencing automated reports against the Self Assessment system. The honest path — declare, calculate properly, file correctly — is now also the easiest path.
How Recap helps with Binance tax
You can add your Binance account to Recap by API or by importing your full Binance account statements — for most Binance users we recommend the statement import, because Binance's API doesn't always return a complete history. Once your data is in, Recap:
- Applies HMRC's Section 104 share-pooling rules to every transaction
- Handles the same-day and 30-day matching rules correctly
- Calculates your capital gains and income tax liability in real time
- Produces a tax report you can hand to your accountant or use to complete your Self Assessment
Unlike some other crypto tax tools, Recap is built specifically for UK tax rules — the only crypto tax software developed in the UK for HMRC compliance. This matters because the share-pooling rules are unique to the UK and are frequently implemented incorrectly by non-UK tools.
Connect your Binance account to Recap →
Key takeaways
- Yes, Binance reports (or will report) to HMRC. HMRC already gathers exchange data via formal information notices; from 1 January 2026 CARF makes the reporting automatic and systematic.
- First CARF reports are due to HMRC by 31 May 2027 for the 2026 calendar year.
- HMRC sent 64,982 crypto nudge letters in 2024/25 — a 134% year-on-year increase — based on data already in its hands.
- Voluntary disclosure attracts lower penalties than waiting for HMRC to make contact — HMRC's dedicated Cryptoasset Disclosure Facility is the natural starting point.
- Recap automates HMRC-compliant calculation of Section 104, same-day and 30-day rules — connect Binance once and the report is ready for Self Assessment.
References
- HMRC, Domestic reporting of UK resident cryptoasset users under the Cryptoasset Reporting Framework
- HMRC, Cryptoassets Manual — CRYPTO22000
- HMRC, Tell HMRC about unpaid tax on cryptoassets (Cryptoasset Disclosure Facility)
- Schedule 23 of the Finance Act 2011 — legislation.gov.uk
- Schedule 36 of the Finance Act 2008 (information and inspection powers) — legislation.gov.uk
- The Reporting Cryptoasset Service Providers (Due Diligence and Reporting Requirements) Regulations 2025 — UK statutory instrument bringing CARF into UK law
- UHY Hacker Young, 'Nudge letters' sent to crypto traders more than double to 65,000… (FOI primary source)
- Recap, Crypto Asset Reporting Framework: Industry experts share the potential impact of new regulations (2023) — source of the Daniel Howitt quote
- Recap, UK crypto tax: a comprehensive guide
- Recap, What to do if you receive a HMRC nudge letter about your crypto
- Recap, Understanding HMRC's bed and breakfast rule
- Recap, The OECD releases its new crypto asset reporting framework (CARF)
- Recap, How to File Crypto Taxes with HMRC: Step-by-Step Guide
- Recap, Capital Gains Tax on Crypto UK: Rates & Rules for 2025/26
- Recap, How to value crypto for UK tax: HMRC rules, methods & record-keeping
