TLDR
- HMRC sent 65,000 crypto tax warning letters in 2024–25, up 134% from 2023–24.
- Crypto exchanges now share user data with HMRC for tax compliance tracking.
- Seven million UK adults now own crypto, up from five million in 2022.
- CARF rules begin in 2026 to enable global crypto tax data sharing with HMRC.
HM Revenue & Customs (HMRC) is tightening its oversight of crypto activity. The UK tax authority sent 65,000 warning letters to individuals suspected of underreporting or evading tax on crypto gains during the 2024–25 tax year, according to the Financial Times. This number is over twice the amount sent in the previous year, signaling an increased effort to enforce crypto tax compliance.
HMRC Ramps Up Crypto Tax Enforcement
HMRC issued 65,000 “nudge letters” to crypto holders in the last tax year, up from 27,700 in 2023–24. These letters serve as early warnings to individuals who may have failed to report taxable crypto activity such as sales, trades, or spending. The letters are not legal notices but aim to prompt voluntary corrections before any formal investigation is launched.
UHY Hacker Young, the accounting firm that obtained the figures via a Freedom of Information request, said the sharp rise shows HMRC’s growing capacity to detect crypto activity. Neela Chauhan, a partner at the firm, told the Financial Times, “There’s now a volume of people trading in crypto and not understanding that even if they move from one coin to another, it triggers capital gains tax.”
Crypto Transactions Now Under Closer Watch
The UK treats crypto assets as property, so most transactions are considered disposals and may be subject to Capital Gains Tax (CGT). These include selling, swapping one crypto for another, or using crypto to buy goods or services. Crypto received through mining, staking, airdrops, or employment is treated as income and taxed separately.
CGT rates were raised in October 2024. For disposals made after that date, the basic rate is 18% and the higher rate is 24%. HMRC now receives data directly from crypto exchanges, which has made it easier to identify taxpayers who may not be reporting their gains accurately.
Over the past four years, HMRC has sent more than 100,000 nudge letters, but the latest figures suggest a sharp increase in enforcement activity. The availability of detailed data has played a key role in this change.
New Global Reporting Rules Begin in 2026
Starting in January 2026, HMRC will receive crypto user data from exchanges under the Crypto-Assets Reporting Framework (CARF). This system, adopted by around 70 jurisdictions, will require crypto platforms to report detailed information about user activity to national tax authorities.
Exchanges will begin collecting data throughout 2026, and the first filings are due by May 31, 2027. HMRC’s access to this data is expected to further increase its ability to track undeclared crypto gains. The Organisation for Economic Co-operation and Development (OECD) developed the CARF in response to the growing use of crypto assets for cross-border activity.
Similar data-sharing efforts are already being adopted in other countries. For example, India’s tax authority is pursuing over 400 suspected evaders using data from Binance.
UK Crypto Ownership and Market Changes
According to the Financial Conduct Authority, an estimated seven million UK adults now own crypto assets, up from five million in 2022. As adoption rises, many individuals may be unaware of the tax obligations tied to their crypto transactions.
At the same time, the UK’s Financial Conduct Authority has lifted a four-year ban on crypto-based exchange-traded notes (ETNs) for retail investors. This change could lead to further market growth. IG Group projects that the UK crypto market could grow by 20% following the rule change.
