Surge in enforcement against crypto investors
HM Revenue & Customs (HMRC) has sharply escalated its pursuit of unpaid tax on cryptocurrency gains, more than doubling the number of warning letters sent to investors in the past year.
New figures obtained under the Freedom of Information Act show the tax authority issued 65,000 “nudge letters” to suspected crypto investors in the 2024–25 tax year, up from 27,700 the year before. The letters are intended to encourage taxpayers to come forward before formal investigations begin.
Over the past four years, HMRC has sent more than 100,000 warnings to digital asset holders, reflecting the scale of the government’s growing scrutiny of the booming crypto market.
Millions may owe capital gains tax
Tax experts say thousands of investors remain unaware that profits from trading crypto are subject to capital gains tax – and, in some cases, income tax.
“The tax rules surrounding crypto are quite complex,” said Neela Chauhan, partner at UHY Hacker Young, the firm that obtained the data.
“Even swapping one coin for another can trigger a tax event. Many traders simply don’t realise this.”
According to the Financial Conduct Authority, around 7 million UK adults now hold an estimated £12.9 billion in crypto assets – a figure that has risen sharply as bitcoin prices surged 315 per cent in the two years to October 2025.
Data sharing to tighten from 2026
HMRC’s crackdown is aided by direct data sharing with major crypto exchanges, giving it unprecedented visibility into users’ transactions. From 2026, the UK will also join a global OECD initiative – the Crypto-Assets Reporting Framework – which will automatically exchange data between tax authorities worldwide.
“HMRC now has a very clear picture of who’s trading and what they’re making,” Chauhan warned.
“Anyone who hasn’t declared their gains will find it increasingly difficult to avoid the tax authority’s attention.”
Expert advice urged amid growing scrutiny
Tax advisers say investors who have made undeclared profits should act quickly to regularise their affairs.
“Unprompted disclosures attract lower penalties,” said Andrew Park, tax investigations partner at Price Bailey.
He noted that some investors face large tax bills, while others could offset significant losses – provided they kept accurate records.
“What we’re seeing now was inevitable,” Park said.
“The only surprise is how long it took HMRC to act.”
