Crypto investors brace for fresh crackdown as HMRC ramps up tactics on traders suspected of underpaying tax
HMRC has stepped up its crackdown on cryptocurrency investors suspected of underpaying tax, sending 81,000 warning letters over the past year, according to a Freedom of Information request obtained by accountancy firm UHY Hacker Young. This marks a 25 per cent rise on the 65,000 letters issued the previous year and comes ahead of a major expansion in HMRC's access to investor data, meaning far more crypto traders are likely to face scrutiny and possible investigation.
The "nudge" letters, texts and notifications are being sent before formal probes begin, as officials suspect widespread unpaid tax from crypto's bull run in the three years to October 2025. Investors must pay capital gains tax on profits above the £3,000 annual allowance when they sell, swap or spend crypto, at rates of 18 or 24 per cent, though many are reportedly unaware that swapping between cryptocurrencies or earning from lending crypto can also be taxable. By the end of May, HMRC will start receiving investor names, addresses, National Insurance numbers and transaction records from crypto exchanges in 52 jurisdictions, including the Cayman Islands and Ireland, with 15 more jurisdictions following a year later.
- HMRC sent 81,000 tax warning letters to crypto investors, up 25%
- Crypto profits above £3,000 face 18-24% capital gains tax
- HMRC to get investor data from 52 jurisdictions by end of May
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Cryptocurrency investors in the UK are facing closer scrutiny from HM Revenue and Customs (HMRC), the government body responsible for collecting tax. Anyone who sells, swaps or spends crypto for a profit above a set tax-free allowance is generally required to pay capital gains tax, but the way crypto works has meant many people have not realised they owe anything, or how much.
HMRC has been sending large numbers of "nudge" letters, texts and other notifications to suspected under-payers, encouraging them to review their tax position before any formal investigation begins. Officials believe a lot of tax has gone unpaid because of the sharp rise in crypto prices in recent years, and because some transactions that trigger a tax bill, such as swapping one cryptocurrency for another, are less widely understood as taxable events than a straightforward cash sale.
This matters because HMRC's ability to check up on investors is about to expand significantly, as crypto exchanges in dozens of countries prepare to start sharing customer data, including names and transaction records, with UK tax authorities. That data-sharing arrangement is part of a wider international effort to make it harder for crypto gains to go untracked, and it is expected to bring far more investors within reach of HMRC's compliance checks.