The U.K.’s tax agency is turning up the heat on crypto traders, more than doubling the number of warning notices it sent to suspected underpayers in the latest tax year as digital-asset ownership swells.
HM Revenue & Customs dispatched almost 65,000 so-called “nudge letters” in 2024/25, up from 27,700 a year earlier, the Financial Times reported, citing data released via a Freedom of Information request by accounting firm UHY Hacker Young.
The letters are aimed at getting investors to correct filings voluntarily before HMRC opens formal inquiries. More than 100,000 have gone out over the past four years.
Ownership is rising fast. About 7 million U.K. adults now hold crypto, according to the Financial Conduct Authority, up from roughly 5 million in 2022 and 2.2 million in 2021.
HMRC’s standard letter lays out what counts as a taxable “disposal.” Beyond selling coins for pounds or dollars, it includes swapping one token for another (for example, exchanging Bitcoin for Ether or using crypto to buy an NFT), spending crypto on goods and services, and gifting to anyone other than a spouse or civil partner.
It also warns that gains can be taxable even if proceeds aren’t withdrawn from an exchange, and that gifts are treated as having realized their sterling value at the time of transfer.
The guidance notes that those who dispose of crypto may owe capital gains tax, while people who receive crypto, through lending, staking, mining, or as employment compensation, may face Income Tax and National Insurance.
HMRC directs taxpayers to GOV.UK resources and its Cryptoassets Manual, flagging that the rules are complex and recommending professional advice where needed.
Regulators are equipping themselves with more data. HMRC already gathers transaction details from major exchanges and from 2026 will receive automatic cross-border reporting under the OECD’s Crypto-Assets Reporting Framework.
Policy debates are unfolding elsewhere. In Washington, senators are weighing a de minimis exemption for small payments and clarifying how staking rewards are taxed.