HMRC has significantly increased its compliance activity aimed at UK cryptocurrency investors, issuing 64,982 crypto-related warning letters during the 2024–25 tax year.
According to figures obtained through a Freedom of Information request, HMRC continues to focus on ensuring taxpayers correctly report gains and income arising from cryptoassets.
Overall, HMRC issued more than 104,000 Capital Gains Tax (CGT) compliance letters during 2024-25, with crypto-related enquiries accounting for over 62% of the total.
The latest figures show that crypto now represents the majority of HMRC’s CGT compliance campaigns, highlighting the department’s growing use of data to identify potential under-reporting.
This increase reflects HMRC’s continued investment in data analytics and information sharing to identify taxpayers who may not have correctly reported their crypto transactions.
Many investors remain unaware that cryptocurrency transactions can give rise to UK tax liabilities.
Depending on the circumstances, buying, selling, exchanging or gifting cryptoassets may result in:
Calculating the correct tax position can also be complex. Investors are often required to maintain detailed records of:
Even transactions that do not involve converting crypto into cash may have tax consequences.
Many taxpayers remain unaware that cryptoasset transactions can give rise to UK tax liabilities, particularly where assets are exchanged rather than converted into cash.
If you’ve received a crypto nudge letter from HMRC, it’s important not to ignore it.
These letters are not necessarily an indication that HMRC believes tax has been underpaid. Instead, they are intended to encourage taxpayers to review their tax affairs and ensure any reporting is complete and accurate.
If you’ve received one of these letters, see our previous article, Received an HMRC Nudge Letter? explains why HMRC sends these letters, what they mean and the practical steps you should consider before responding.
International reporting rules will increase transparency
HMRC’s compliance activity is also expected to increase following the introduction of new international crypto reporting requirements.
The Crypto-Asset Reporting Framework (CARF) and related international information exchange rules will require many cryptoasset service providers to collect and share customer transaction data with tax authorities around the world.
As the Crypto-Asset Reporting Framework (CARF) is implemented internationally, HMRC is expected to receive significantly more information from participating jurisdictions about UK taxpayers’ cryptoasset transactions.
Whether you are an occasional investor or an active trader, good record-keeping remains essential. Investors should keep details of purchases, disposals, wallet transfers, token swaps, transaction fees and the sterling value of each transaction to support their Self-Assessment tax return.
Reviewing your reporting before submitting your Self-Assessment tax return can help reduce the risk of errors and avoid unnecessary enquiries.
Cryptocurrency taxation is an increasingly complex area, particularly where there are multiple exchanges, wallets, DeFi transactions or overseas platforms involved.
Our specialist tax team advises individuals, investors and businesses on UK crypto tax compliance, disclosures and HMRC enquiries.
If you have received an HMRC crypto nudge letter or are concerned that your crypto transactions may not have been reported correctly, please contact the ETC Tax team. We can help you review your position and discuss the appropriate next steps. Head over to our website to view the information on our crypto page – click here.
FAQ
HMRC is increasing its compliance activity as cryptocurrency ownership grows and more data becomes available from exchanges and international reporting initiatives.
Not necessarily. A nudge letter encourages taxpayers to review their tax affairs and confirm that any reporting obligations have been met.
Yes. Depending on the transaction, cryptoassets may be subject to CGT or Income Tax under UK tax legislation.
You should retain details of purchases, sales, exchanges, wallet transfers, transaction fees and the sterling value of each transaction.
Increasingly, yes. International reporting initiatives will require many crypto asset service providers to share customer information with tax authorities, including HMRC.
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