The UK’s tax authority has intensified its examination of cryptocurrency investors, increasing the number of warning letters sent to those suspected of underreporting or evading taxes on digital asset earnings.
HM Revenue & Customs (HMRC) dispatched nearly 65,000 letters in the 2024–25 tax year, a significant 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 before formal investigations are initiated.
This notable increase illustrates HMRC’s increased emphasis on tax compliance related to cryptocurrencies. Over the last four years, the agency has issued over 100,000 such letters, with activity rising alongside the growth of crypto adoption and asset values.
Related: How to file crypto taxes in 2025 (US, UK, Germany guide)
7 million UK adults own crypto
The Financial Conduct Authority estimates that seven million adults in the UK currently hold cryptocurrencies, an increase from approximately 10% (5 million) in 2022, or 4.4% (2.2 million) in 2021, reflecting rising interest.
“The tax regulations surrounding cryptocurrency are quite intricate, and many individuals trading cryptocurrencies do not realize that even exchanging one coin for another can trigger capital gains tax,” said Neela Chauhan, a partner at UHY Hacker Young, which made the FOI request, as stated to the FT.
HMRC’s oversight of the market has significantly improved. The agency now obtains transaction data directly from leading cryptocurrency exchanges and will automatically access global exchange data starting in 2026 under the Organization 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 weigh crypto tax exemptions
US senators are considering changes to crypto tax legislation, which may include exempting small transactions from taxation and clarifying the treatment of staking rewards.
During a Finance Committee hearing in the Senate earlier this month, lawmakers discussed whether routine crypto payments should incur capital gains tax and how to appropriately categorize income from staking services. Coinbase’s VP of tax, Lawrence Zlatkin, urged Congress to implement a de minimis exemption for crypto transactions below $300.
Additionally, South Korea’s National Tax Service (NTS) has intensified efforts against crypto tax evasion, warning that even assets held in cold wallets may be confiscated if associated with unpaid taxes.
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