65,000 Crypto Investors Get Tax Letters: What HMRC’s Crackdown Means for You
HMRC sends 65,000 crypto tax warning letters, a 134% jump, as UK investors face new rules, lower CGT allowance, and tighter...
Quick overview
The UK’s tax authority, HM Revenue & Customs (HMRC), is stepping up its efforts to catch out people hiding cryptocurrency gains, sending out nearly 65,000 letters to crypto holders during the 2024-25 tax year – that’s up a whopping 134% on last year and is a clear sign that the government is getting serious about this.
These letters typically go to people who’ve been flagged for not declaring or under-reporting their crypto-related earnings and capital gains, and they act as a bit of an early warning sign. HMRC are essentially saying to these people: “Check your tax filings are in order or we’ll come after you with a fine.”
The increase in enforcement activity comes as HMRC has direct access to data from major crypto exchanges, which is allowing them to spot discrepancies between what people are reporting and what their actual trading activity is. This trend is also being followed in other parts of the world, notably India, where over 400 people are reportedly under investigation using data supplied by exchanges like Binance.
Starting on January 26th, 2026, HMRC will begin collecting detailed user data through the Crypto Assets Reporting Framework (CARF), a significant international agreement signed by approximately 70 countries, providing HMRC with a new level of insight into the digital asset world. The first batch of reports will be due by May 31st 2027.
How the UK Taxes Cryptocurrency
So how does the taxman work out how much tax people owe on their crypto gains then?
Crypto is treated just like any other investment asset in the UK, rather than like currency. So when you sell, swap or spend your crypto then that’s a taxable event that can trigger Capital Gains Tax.
Here’s what’s what right now:
- The annual CGT allowance has been cut to £3,000 – down from £6,000.
- If you’re a basic-rate taxpayer then you’ll pay 18% on gains above that allowance, and if you’re a higher-rate taxpayer then you’ll pay 24%.
- If you get crypto as income (via staking, mining, airdrops or an employment contract) then that’s taxed at 20-45% income tax with National Insurance on top.
And remember – even just swapping one cryptocurrency for another or buying something with it is a taxable event. If you don’t declare these transactions then you could be in for a nasty backdated tax bill and a fine to boot.
Why You Should Take Notice
This all marks a big shift in the way the UK is approaching digital assets – HMRC is getting a lot more serious about this and is cracking down on anyone who’s not playing by the rules.
If you’re a crypto investor in the UK then you need to take heed of this – especially now that HMRC has got so much more data and reporting is going to be mandatory soon.
So here’s what to do:
- Keep your records in order: Keep clear records of all your transactions on all your wallets and exchanges.
- Check your tax filings: Make sure you’re declaring all your disposals and earnings for each year.
- Stay informed: Make sure you’re up to date on the changes to the tax rules – the new CGT rates apply from October 30th 24
- Act early: If you get one of those warning letters then respond promptly – it’s always better to come clean than to be caught out later on.
For long term investors this is all part of a bigger picture – governments are realising that digital assets are here to stay and are starting to treat them just like traditional investments – which means that you need to start treating them like that too.
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