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Press release covered by BBC News, The Sun, The Independent, Daily Express ,GB News, FT Adviser, Bitcoin.com News, Inkl, Crypto News, Digit News, Cryptopolitan, PortalCripto, Protos Crypto News, Silicon, SSBCrack News and Bitget
- HMRC sends out 81,000 warning letters to crypto investors up 25% on the previous year
- 2027 expected to “open the floodgates” on investigations as HMRC starts getting data from cryptocurrency businesses globally
In the last 12 months HMRC has sent 81,000 warning letters to crypto investors that it suspects may have underpaid taxes up 25% from the 65,000 such letters that it sent last year*.
Those “nudge” letters are sent to individuals that HMRC suspects have underpaid tax on cryptos, giving them the opportunity to approach HMRC and disclose underpaid tax before being investigated.
The number of letters sent in 2023/24 was 27,714.
Although the prices of cryptocurrencies like Bitcoin and Ethereum have fallen since October of last year, HMRC suspects that there are still large amounts of unpaid capital gains from the bull run between December 2022 and October 2025.
Neela Chauhan, partner in our London office, comments: “There is the expectation amongst tax authorities that cryptocurrency investment is rife with tax evasion.”
“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.”
“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.”
At present HMRC can make requests for information to UK based cryptocurrency businesses about UK taxpayers.
Neela Chauhan says: “Many individuals assume that transactions undertaken through overseas exchanges fall outside the scope of HMRC's reporting requirements, particularly where no UK bank account is involved. However, UK resident individuals are generally subject to UK tax on their worldwide income and gains, including profits arising from cryptocurrency transactions conducted through offshore platforms. As a result, taxpayers may inadvertently fail to report taxable gains or income simply because they do not appreciate that overseas exchanges do not remove their UK tax obligations.”
The number of tax investigations into cryptocurrency traders is expected to increase dramatically next year. From May 31 2027, HMRC will automatically start receiving full data on UK residents from cryptocurrency exchanges located in 52 different jurisdictions including the Channel Islands , the Cayman Islands, Ireland and Lichenstein.
A further 15 jurisdictions will start providing information to HMRC in 2028 including Singapore, Switzerland and Gibraltar. This information will include the investor's full transaction records, name, address and National Insurance number.
Adds Neela: "Once HMRC has this data then tax investigations into cryptocurrency investors will be like shooting fish in a barrel."
"With this data and some fairly basic AI built software, HMRC will be able to build a comprehensive list of all cryptocurrency investors that are behind on their CGT or income tax. It will take all the guesswork out of the process for HMRC's tax investigations teams."
HMRC has set up a disclosure service for crypto investors to disclose unpaid tax. If you approach HMRC through this facility before HMRC contacts you then penalties would be capped at 30% of the unpaid tax. If you use this facility after being prompted by HMRC, then the penalties are in the range of 70-100% of the unpaid tax.
*Year end April 5
