HM Revenue and Customs (HMRC) has increased its scrutiny of cryptocurrency investors, sending 81,000 warning letters over suspected unpaid taxes during the past 12 months, according to figures obtained by accountancy group UHY Hacker Young via a Freedom of Information request.
The total represents a 25% increase from approximately 65,000 letters sent in the previous year, extending a sharp escalation from 27,714 letters in the 2023-24 tax year. These communications, known as nudge letters, give recipients an opportunity to disclose unpaid tax before the agency opens a formal investigation.
UHY Hacker Young Partner Neela Chauhan noted that some noncompliance stems from investors misunderstanding complex rules or mistakenly assuming that the tax agency cannot see their transactions. Chauhan also pointed out that some individuals incorrectly assume that using an overseas exchange removes their UK obligations, though UK residents are generally taxed on worldwide income and gains.
Under the UK tax framework, selling cryptocurrency for pounds, exchanging one digital asset for another, spending crypto on goods and services, and gifting tokens can all create taxable disposals. Additionally, income earned through crypto lending or staking may fall under separate income tax rules.
To provide greater visibility, crypto service providers operating in the UK must collect identifying information and transaction summaries under the Cryptoasset Reporting Framework. Their first reports, covering transactions from January 1 through December 31, 2026, are due between January 1 and May 31, 2027. International information exchanges will also provide HMRC with data regarding UK residents using providers in other participating jurisdictions, with UHY expecting 52 jurisdictions to supply data in 2027 and 15 more in 2028.
Separately, changes scheduled for April 2027 are designed to provide no-gain, no-loss treatment for qualifying crypto loans and automated market-making arrangements until an economic disposal occurs. This revised treatment is expected to affect about 700,000 individuals.
