UK taxman doubles crypto capital gains crackdown
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HM Revenue & Customs (HMRC) has more than doubled the number of warning letters sent to cryptocurrency investors over potential unpaid capital gains taxes, reflecting a broader push to enforce compliance in the fast-growing digital asset sector.
According to data released under the Freedom of Information Act, HMRC issued 64,982 warning letters in the 2024–25 tax year — up from 27,713 the year before and 8,329 in 2021–22. The letters, known as “nudge letters,” are sent to individuals suspected of underreporting gains from trading or disposing of crypto assets.
Tax experts say the increase points to a growing enforcement effort as the UK’s crypto market expands. The Financial Conduct Authority estimates around 7 million UK adults now hold roughly £12.9 billion worth of crypto assets, up from £7.8 billion in 2022. Over the same period, Bitcoin’s price has risen more than 300%.
Tax experts say the increase points to a growing enforcement effort as the UK’s crypto market expands. The Financial Conduct Authority estimates around 7 million UK adults now hold roughly £12.9 billion worth of crypto assets, up from £7.8 billion in 2022. Over the same period, Bitcoin’s price has risen more than 300%.
The tax rules surrounding crypto are quite complex and there’s now a volume of people who are trading in crypto and not understanding that even if they move from one coin to another it triggers capital gains tax,
She added that many investors are unaware of their reporting obligations, while others “are opposed to the idea of paying tax on their gains.”
HMRC has expanded its access to exchange data, allowing it to match transactions with taxpayer records more effectively. From 2026, the agency will begin automatically receiving data from more crypto platforms under the OECD’s Crypto-Assets Reporting Framework, giving it a clearer view of UK investors’ holdings and activity.
Tax professionals warn that non-compliance could become increasingly difficult to conceal.
Andrew Park, tax investigations partner at Price Bailey, said the increase in enforcement “was always inevitable” given years of data-sharing between HMRC and other authorities such as the U.S. Internal Revenue Service (IRS). He noted that some investors may face substantial tax bills from earlier gains, while others could offset losses if they have maintained proper records.
Under current rules, UK residents must pay capital gains tax on crypto profits above £3,000, or income tax and national insurance if HMRC deems their trading activity to constitute a business. Tax applies not only to selling tokens but also to exchanging them, using them for purchases, or gifting them to others outside a spouse or civil partner.
Park advised investors who may have underreported gains to make voluntary disclosures to limit penalties.
HMRC has expanded its access to exchange data, allowing it to match transactions with taxpayer records more effectively. From 2026, the agency will begin automatically receiving data from more crypto platforms under the OECD’s Crypto-Assets Reporting Framework, giving it a clearer view of UK investors’ holdings and activity.
Tax professionals warn that non-compliance could become increasingly difficult to conceal.
Andrew Park, tax investigations partner at Price Bailey, said the increase in enforcement “was always inevitable” given years of data-sharing between HMRC and other authorities such as the U.S. Internal Revenue Service (IRS). He noted that some investors may face substantial tax bills from earlier gains, while others could offset losses if they have maintained proper records.
Under current rules, UK residents must pay capital gains tax on crypto profits above £3,000, or income tax and national insurance if HMRC deems their trading activity to constitute a business. Tax applies not only to selling tokens but also to exchanging them, using them for purchases, or gifting them to others outside a spouse or civil partner.
Park advised investors who may have underreported gains to make voluntary disclosures to limit penalties.
Unprompted disclosures attract a more benign treatment from HMRC — including lower penalties,
Author
Sebile Fane cut her teeth in blockchain by building tiny NFT experiments with friends in her living room, long before the buzzwords took hold. She’s driven by a curiosity for the human stories behind smart contracts — whether it’s a small-town artist minting her first token or a DAO voting on climate grants — and weaves technical insight with genuine empathy.
