The UK tax authority has increased its focus on crypto investors, sending out a record number of warning letters aimed at those who might be underreporting or avoiding taxes on their digital asset gains.
HM Revenue & Customs (HMRC) dispatched almost 65,000 letters during the 2024–25 tax year, a notable rise from 27,700 in the prior year. This statistic was brought to light by The Financial Times, which referenced data acquired through the Freedom of Information Act.
These letters, often referred to as ’nudge letters’, are intended to encourage investors to voluntarily amend their tax reports prior to any formal investigations commencing.
The dramatic rise in warning letters indicates HMRC’s intensified scrutiny over crypto tax compliance. Over the past four years, the agency has issued upwards of 100,000 of these letters, with enforcement gaining momentum alongside increased crypto adoption and rising asset values.
Source: kc-usercontent
Related: How to file crypto taxes in 2025 (US, UK, Germany guide)
7 Million UK Adults Engage in Crypto
The Financial Conduct Authority estimates that approximately seven million adults in the UK now own crypto, an increase from about 10% (5 million) in 2022 or 4.4% (2.2 million) in 2021, highlighting a growing trend.
“The tax rules for crypto are quite complicated, and there’s a substantial number of people now trading crypto without fully understanding that moving between coins activates capital gains tax,” Neela Chauhan, a partner at UHY Hacker Young, stated.
HMRC has greatly improved its market surveillance capabilities. The agency now continuously receives transaction data from major crypto exchanges and will obtain automated access to worldwide exchange data starting in 2026 as part of the OECD’s Crypto-Assets Reporting Framework (CARF).
Related: New York State senator proposes tax on crypto mining energy use
US Legislators Consider Crypto Tax Exemptions
On the other side of the Atlantic, US senators are currently discussing updates to crypto tax policy, which may include exempting smaller transactions from being taxed and clarifying the status of staking rewards.
During a recent Senate Finance Committee hearing, lawmakers explored whether routine crypto transactions should incur capital gains taxes and how to categorize income from staking services fairly. Lawrence Zlatkin, Coinbase’s tax VP, encouraged Congress to consider a de minimis exemption for transactions below $300.
Additionally, South Korea’s National Tax Service has also escalated its efforts against crypto tax evasion, cautioning that even assets in cold wallets will be subject to seizure if associated with unpaid taxes.
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