The UK's HM Revenue and Customs (HMRC) sent 81,172 tax warning letters, emails and text messages to crypto investors during the 2025/26 financial year, according to figures reported on Aug. 20. As reported by the BBC, this represents a significant increase from 64,982 warnings in 2024/25 and 27,714 in 2023/24. The latest total was therefore about 25% higher than the previous year and nearly three times the figure recorded two years earlier. The figures came from a Freedom of Information request obtained by accounting firm UHY Hacker Young. According to UHY partner Neela Chauhan, there is expectation among tax authorities that cryptocurrency investment is rife with tax evasion, with many crypto traders being young, having few previous dealings with HMRC, and often assuming the agency has limited visibility into their trading activities. HMRC has stated that the letters are intended to help taxpayers understand their responsibilities and encourage them to review their tax affairs, with an HMRC spokesperson emphasizing their commitment to helping people pay the right amount of tax.
HMRC treats crypto sales, swaps, purchases and most gifts as potential taxable disposals for investors. According to HMRC's official guidance, UK taxpayers may owe Capital Gains Tax when they sell crypto for fiat currency, exchange one token for another, purchase goods with crypto or give tokens to another person. The tax applies to gains rather than the total value of a transaction, and individuals must calculate proceeds in pounds sterling and deduct eligible acquisition costs. Crypto received through employment, mining, staking, lending or some decentralized finance arrangements may instead create Income Tax and National Insurance obligations. As noted by UHY Hacker Young, gains from exchanging one cryptocurrency for another are taxable, as are gains from lending crypto tokens. Accountants are now urging cryptocurrency investors to review their records and establish whether they have correctly reported their transactions, as investors can face tax bills and penalties if they fail to declare taxable profits from cryptocurrency transactions.
The UK introduced the Cryptoasset Reporting Framework on January 1, 2026, requiring covered crypto service providers to collect identifying information and transaction data from customers. As reported by HMRC, platforms must submit their first reports covering 2026 activity between January 1 and May 31, 2027. The framework supports information exchanges between participating tax jurisdictions, potentially giving HMRC access to records held by overseas platforms serving UK residents. HMRC estimates the reporting measures could raise as much as £315 million by April 2030. From March 2027, cryptocurrency platforms in dozens of countries outside the UK will be obliged to collect and share information on their customers' trades with tax authorities. The new international reporting requirements are designed to give tax authorities greater visibility over cryptocurrency transactions and make it harder for investors to conceal taxable activity.
HMRC has recovered more than £8 million from settlements with hundreds of crypto holders, three years after beginning its crackdown, according to a Freedom of Information request from Identomat found last month. The agency suspects that some undeclared liabilities arose from gains accumulated as crypto prices increased between late 2022 and 2025, when prices surged from around £14,000 to around £90,000 during the period from December 2022 to October 2025. Unpaid domestic tax can attract penalties reaching 100% of tax due, plus accrued interest charges, according to HMRC. Customers who fail to provide required details can face a penalty of up to £300, while platforms can receive penalties for incomplete or inaccurate reports. HMRC allows taxpayers to report previously unpaid crypto liabilities through its Cryptoasset Disclosure Service. Despite the recent fall in Bitcoin and Ethereum prices, HMRC's focus remains on whether taxable gains were made when assets were disposed of, rather than simply on their current value.
