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The UK tax authority has significantly increased its examination of cryptocurrency investors, doubling the amount of warning letters dispatched to those suspected of underreporting or avoiding taxes on digital asset profits.
HM Revenue & Customs (HMRC) sent out nearly 65,000 letters in the 2024–25 tax year, a rise from 27,700 the previous year, as reported by the Financial Times on Friday, citing information obtained through the Freedom of Information Act.
These letters, referred to as “nudge letters,” aim to encourage investors to voluntarily amend their tax returns prior to the commencement of formal investigations.
The notable surge indicates HMRC’s increasing emphasis on compliance with crypto-related tax obligations. In the last four years, the agency has issued over 100,000 of these letters, with activity ramping up as both crypto adoption and asset values have soared.
Related: How to file crypto taxes in 2025 (US, UK, Germany guide)
7 million UK adults own crypto
The Financial Conduct Authority estimates that approximately seven million adults in the UK currently hold cryptocurrency, an increase from about 10% (5 million) in 2022 and 4.4% (2.2 million) in 2021, reflecting a growing interest.
“The taxation regulations surrounding cryptocurrencies are quite intricate, and now there’s a substantial number of individuals trading in crypto who may not realize that shifting from one coin to another triggers capital gains tax,” stated Neela Chauhan, a partner at UHY Hacker Young, who filed the FOI request, in an interview with the FT.
HMRC has significantly enhanced its visibility in the market. The agency now obtains transaction data directly from major cryptocurrency exchanges and is set to automatically access global exchange data by 2026 under the Organisation for Economic Co-operation and Development (OECD)’s Crypto-Assets Reporting Framework (CARF).
Related: New York State senator proposes tax on crypto mining energy use
US lawmakers consider crypto tax exemptions
US senators are evaluating updates to cryptocurrency tax regulations, including the possibility of exempting smaller transactions from taxation and clarifying the treatment of staking rewards.
During a Senate Finance Committee hearing earlier this month, lawmakers discussed whether routine crypto payments should trigger capital gains tax and how to appropriately classify the income generated from staking services. Coinbase’s vice president of tax, Lawrence Zlatkin, advocated for Congress to implement a de minimis exemption for crypto transactions below $300.
Simultaneously, South Korea’s National Tax Service (NTS) has intensified its efforts to combat crypto tax evasion, cautioning that even assets held in cold wallets could be seized if they are linked to unpaid taxes.
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