The UK tax authority has intensified its efforts to tackle crypto tax non-compliance, sending out approximately 65,000 “nudge” letters during the 2024–25 tax year.
Sharp Rise Revealed by FOIA Data
According to a Financial Times report, data obtained through a Freedom of Information Act (FOIA) request by accounting firm UHY Hacker Young revealed that His Majesty’s Revenue and Customs (HMRC) sent out more than double the number of letters compared to the 27,700 issued the previous year. The data also showed that 8,329 letters were sent to crypto investors in the 2021–22 tax year, while none were issued the following year.
HMRC typically uses these letters as a final warning before initiating a formal tax investigation against individuals suspected of tax evasion or avoidance.
Investor Confusion and Ignorance
Neela Chauhan, a partner at UHY Hacker Young, attributed the surge in potential violations not only to the growing number of crypto users but also to investor ignorance.
“The tax rules around crypto are quite complex, and there’s a large group of people trading crypto who don’t realize that even when they move from one coin to another, it can trigger capital gains tax,” Chauhan explained.
She added that some investors received letters because they were reluctant to pay capital gains tax altogether. Chauhan expects HMRC to intensify its crackdown in the coming years, noting that the agency has made significant progress in collecting and analyzing data from centralized crypto exchanges.
Experts Warn of Stricter Enforcement
Andrew Park, tax investigations partner at Price Bailey, called HMRC’s action “inevitable.” He advised crypto holders to keep meticulous transaction records and ensure that all taxable gains are reported in their annual self-assessment forms.
Park also encouraged uncertain investors to make voluntary disclosures, emphasizing that:
“Voluntary disclosures are treated more leniently by HMRC — including lower penalties.”
This development signals the UK’s growing focus on crypto tax compliance, as regulators tighten oversight amid expanding digital asset participation.
