UK Revenue Service Intensifies its Warnings to Cryptocurrency Investors
The HMRC has significantly increased its outreach to cryptocurrency traders, sending over 65,000 warning letters regarding undeclared capital gains last year.
The UK tax authority has increased its scrutiny of cryptocurrency investors, sending out over 65,000 letters last year to those suspected of tax underreporting or evasion.
HM Revenue & Customs (HMRC) dispatched approximately 65,000 letters in the 2024–25 tax year, a significant rise from 27,700 in the prior year, as reported by the Financial Times based on data obtained under the Freedom of Information Act.
These letters, referred to as “nudge letters,” aim to encourage taxpayers to voluntarily correct their filings before investigations begin.
The upsurge demonstrates HMRC’s intensified commitment to enforce tax compliance related to cryptocurrency. Over the last four years, the body has sent more than 100,000 such notifications, escalating amid increasing crypto adoption and rising market values.
Image: Example of a previous nudge letter sent in 2024. Source: kc-usercontent
7 Million Adults in the UK Own Cryptocurrency
The Financial Conduct Authority estimates that approximately seven million adults in the UK possess cryptocurrency, a leap from around 10% (5 million) in 2022 and 4.4% (2.2 million) in 2021, indicating rising interest in the digital asset space.
“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,” said Neela Chauhan, a partner at UHY Hacker Young, the firm that filed the FOI request.
HMRC has dramatically improved its market visibility. The agency now receives transaction data directly from major cryptocurrency exchanges and will automatically gain access to global exchange data from 2026, as per the OECD’s Crypto-Assets Reporting Framework (CARF).
US Legislators Consider Crypto Tax Exemptions
U.S. Senators are also discussing adjustments to crypto tax laws, including the possibility of exempting small transactions from taxes.
During a recent Senate Finance Committee meeting, lawmakers deliberated on whether routine cryptocurrency payments should incur a capital gains tax and how to categorize income derived from staking services. Lawrence Zlatkin, the VP of tax at Coinbase, advocated for Congress to implement a de minimis exemption for crypto transactions costing less than $300.
In a similar context, South Korea’s National Tax Service has intensified its campaign against cryptocurrency tax evasion, cautioning that even cryptocurrencies stored in cold wallets may be confiscated if linked to unpaid taxes.
