HMRC Crypto Tax Warning Letters Top 81,000 as Deadline Looms

HMRC’s crypto tax warning campaign reached a new scale in 2025/26, with 81,172 letters, emails and text messages sent to investors suspected of underpaying tax on cryptoassets, according to a Freedom of Information request reported by BBC News. That is up from 65,000 in 2024/25 and 27,714 in 2023/24, a threefold increase in two years.

The acceleration matters because HMRC’s nudge letters are not formal investigations. They offer recipients the opportunity to come forward before the taxman pursues the matter formally, according to Cryptopolitan, citing UHY Hacker Young. Voluntary disclosure at this stage can limit penalties to 30% of unpaid tax; once HMRC has intervened, that figure rises to 70% to 100%.

Neela Chauhan, a partner at UHY Hacker Young, put it plainly: ‘A lot of the traders are young, have had little previous exposure to HMRC and often work under the assumption that HMRC has limited visibility over their activities.’

Who Owns Crypto and Why HMRC Is Watching

According to FCA Consumer Research (Wave 5, 2024), UK crypto ownership peaked at 12% of adults in 2024, equivalent to around 7 million people, before falling to 8% in 2025. The 2021 figure was 4.4%, or around 2.2 million adults. The cohort is younger than average: 15% of 18 to 34-year-olds held cryptoassets in 2025 versus 9% of 35 to 54-year-olds.

Chauhan added: ‘The tax treatment of cryptocurrency in the UK is complex, and many individuals do not fully understand their reporting obligations or recognise when transactions give rise to taxable income or gains that must be disclosed to HMRC. Crypto investors often forget that you may still have made a taxable gain even when you are swapping one cryptocurrency for another and might not be aware that the income you can earn by lending cryptocurrencies is taxable.’

HMRC’s reach is set to extend further. From March 2027, cryptocurrency platforms located in dozens of countries will be required to share customer information with tax authorities under new international data-sharing rules. HMRC estimates the new powers will bring in at least £300m over five years, according to BBC News. A full UK regulatory regime for cryptoassets is expected to come into force on 25 October 2027, with the application period opening in September 2026, per the Financial Conduct Authority (FCA).

When the HMRC Crypto Tax Warning Applies: What Triggers a Liability

Capital gains tax (CGT) applies when you dispose of a cryptoasset at a profit. Disposal covers selling, exchanging one cryptocurrency for another, using crypto to pay for goods or services, or giving it to another person (other than a spouse, civil partner, or charity). The annual CGT allowance is £3,000; gains above that are taxable.

The CGT rate depends on total income. Basic-rate taxpayers (income up to £50,270) pay 18% on crypto gains above the allowance; higher and additional-rate taxpayers pay 24%, according to Koinly’s HMRC crypto tax guide. Different cryptocurrencies are treated as separate assets, so gains must be calculated individually on each type held.

Allowable costs can reduce the gain: exchange fees, trading fees and advertising costs for a sale all qualify. Capital losses on cryptoassets can also be offset against gains, provided the losses are reported to HMRC.

Income tax applies separately in several circumstances. Mining rewards and staking income are generally treated as trading or miscellaneous income. Airdropped tokens received in return for a service are also taxable as income. Cryptoassets received as employment income count as ‘money’s worth’ and are subject to income tax at the point of receipt. A £1,000 annual trading and miscellaneous income allowance applies, so only amounts above that threshold trigger income tax from mining, staking, or airdrops.

How to Report and Pay

Gains can be reported either through a self-assessment tax return or via HMRC’s real-time CGT service, which covers assets sold in the current or previous tax year. Reports must be filed by 31 December in the tax year after the gain was made, with payment due by 31 January. A gain made in the 2025/26 tax year, for instance, must be reported by 31 December 2026 and paid by 31 January 2027.

HMRC launched a Cryptoasset Reporting facility in November 2023 to allow taxpayers to voluntarily disclose undeclared income tax or capital gains from cryptoassets, details of which are available via Ross Martin’s disclosure guidance. For anyone who has received one of HMRC’s warning communications, the penalty arithmetic strongly favours acting before the taxman moves first. The March 2027 data-sharing deadline represents the point at which HMRC’s visibility over offshore platform activity expands considerably: investors who have not reconciled their position before then are likely to find the conversation considerably less comfortable.