HMRC intensifies its focus on undeclared crypto profits as ownership and trading activity surge across the UK.
Growing Scrutiny on Crypto Investors
The UK’s HM Revenue & Customs (HMRC) has sharply increased its oversight of cryptocurrency investors, sending nearly 65,000 warning letters in the 2024–25 tax year — more than double the previous year’s 27,700. These so-called “nudge letters” are intended to encourage individuals to voluntarily review and correct their tax filings before official investigations begin.
According to data obtained through the Freedom of Information Act, HMRC has dispatched over 100,000 such letters in the past four years, highlighting a significant escalation in its compliance strategy. The move comes as crypto ownership and trading activity reach new highs in the UK.
Rising Crypto Ownership in the UK
The Financial Conduct Authority (FCA) estimates that around seven million UK adults now own crypto assets, a steep rise from five million in 2022 and 2.2 million in 2021. This rapid growth underscores the increasing need for clear tax awareness among retail traders and investors.
“The tax rules surrounding crypto are quite complex, and there’s now a large number of people who are trading without realizing that even moving from one coin to another can trigger a capital gains tax,” said Neela Chauhan, a partner at UHY Hacker Young, the firm that submitted the FOI request.
Enhanced Data Access and Global Cooperation
HMRC’s ability to track digital asset activity has improved substantially. The agency now receives transaction data directly from major crypto exchanges operating in the UK. From 2026 onward, it will also gain automatic access to global crypto exchange data through the Organisation for Economic Co-operation and Development (OECD)’s Crypto-Assets Reporting Framework (CARF).
This expanded access will make it increasingly difficult for investors to hide gains from crypto trades or transfers.
The UK’s crackdown mirrors global efforts to regulate and tax digital assets. In the United States, lawmakers are considering tax exemptions for small crypto transactions and clearer rules on staking rewards, while South Korea’s National Tax Service has warned that even cold wallet holdings could be seized if linked to unpaid taxes.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.