**HMRC Sends 65,000 Crypto Tax Warning Letters in 2024-25, Reflecting a 134% Increase from Previous Year**
HM Revenue & Customs (HMRC) is intensifying its oversight of cryptocurrency activity in the UK. During the 2024-25 tax year, HMRC sent 65,000 “nudge letters” to individuals suspected of underreporting or evading tax on crypto gains. This figure marks a significant increase of 134% compared to the 27,700 letters sent in 2023-24, signaling a stronger enforcement push on crypto tax compliance.
### What Are Nudge Letters?
These nudge letters act as early warnings, alerting crypto holders that they may have failed to report taxable activities, such as sales, trades, or spending of crypto assets. While these letters are not formal legal notices, their purpose is to encourage voluntary correction before HMRC initiates any formal investigation.
Neela Chauhan, a partner at a legal firm, told the *Financial Times*, “There’s now a volume of people trading in crypto and not understanding that even if they move from one coin to another, it triggers capital gains tax.”
### Increased Scrutiny of Crypto Transactions
In the UK, crypto assets are treated as property. This means most transactions—including selling crypto, swapping one cryptocurrency for another, or using crypto to purchase goods or services—are treated as disposals and may be subject to Capital Gains Tax (CGT).
Additionally, crypto acquired through mining, staking, airdrops, or as employment income is taxed separately as income.
As of October 2024, CGT rates on crypto disposals increased to 18% for basic rate taxpayers and 24% for higher-rate taxpayers.
### Enhanced Data Sharing from Crypto Exchanges
HMRC now obtains user data directly from crypto exchanges, improving its ability to identify taxpayers who fail to report their gains accurately. Over the past four years, HMRC has sent more than 100,000 nudge letters, but recent data availability has led to a sharp spike in enforcement activity.
### Global Crypto Tax Reporting to Begin in 2026
Looking ahead, January 2026 will mark the start of the Crypto-Assets Reporting Framework (CARF). This international system, adopted by around 70 jurisdictions, requires crypto platforms to report detailed user transaction data to national tax authorities, including HMRC.
Crypto exchanges will begin collecting this data throughout 2026, with the first reports due by May 31, 2027. This enhanced transparency is expected to further bolster HMRC’s ability to track undeclared crypto income.
The Organisation for Economic Co-operation and Development (OECD) developed CARF in response to the growing use of crypto assets across borders. Similar efforts are already in place elsewhere; for example, India’s tax authority is investigating over 400 suspected evaders using data from Binance.
### Rising UK Crypto Ownership and Market Developments
According to the Financial Conduct Authority (FCA), approximately seven million UK adults now own crypto assets, up from five million in 2022. This growing adoption means more individuals may be unaware of their tax obligations related to crypto transactions.
Meanwhile, the FCA has lifted a four-year ban on crypto-based exchange-traded notes (ETNs) for retail investors, which could stimulate further market growth.
IG Group projects that the UK crypto market may expand by 20% following this regulatory change.
—
As HMRC intensifies its efforts and global reporting frameworks come into effect, UK crypto investors should stay informed about their tax responsibilities to avoid penalties.
https://coincentral.com/uk-tax-authority-sends-65000-letters-to-suspected-crypto-tax-evaders/
