The UK’s HM Revenue & Customs (HMRC) has significantly increased its scrutiny of crypto investors. In the last tax year, nearly 65,000 warning letters were issued to individuals suspected of underreporting or evading taxes on their digital asset gains, a sharp rise from 27,700 letters sent the previous year. This is part of the UK government’s strategy to ensure compliance with tax regulations in the growing crypto market.

These letters, often referred to as “nudge letters,” aim to encourage investors to amend their tax filings voluntarily before any formal investigations commence.

This rise in letters sent correlates with the increasing interest in cryptocurrency, as the Financial Conduct Authority reports that approximately 7 million UK adults now own crypto assets, up from just 5 million in 2022.

Neela Chauhan from UHY Hacker Young pointed out that the tax regulations surrounding cryptocurrencies can be quite intricate. She also mentioned that many traders are unaware that even switching between different coins can lead to capital gains tax liabilities.

Furthermore, HMRC has enhanced its operational visibility into the crypto market by acquiring transaction data directly from major exchanges. By 2026, they will have automated access to data from global exchanges as per the OECD’s Crypto-Assets Reporting Framework.

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• South Korea’s National Tax Service also intensifies its actions against tax evasion in the crypto sector.