HMRC sends 81,000 warning letters to crypto holders in tax crackdown

If you bought, sold, or swapped crypto in the UK recently, there’s a decent chance HMRC would like a word. The tax authority sent 81,000 warning letters to crypto holders over the latest 12-month period, targeting individuals suspected of underreporting Capital Gains Tax on digital asset transactions.

That’s a 25% jump from the 65,000 letters dispatched the year before, according to Freedom of Information data obtained by accounting firm UHY Hacker Young. The cumulative total since HMRC began this campaign in 2020 now exceeds 101,000 letters.

What the letters actually say

The letters focus on CGT obligations arising from crypto disposals. That includes the obvious stuff like selling Bitcoin for pounds, but also less intuitive taxable events: swapping one token for another, earning income from crypto lending, or converting tokens through decentralized protocols.

Neela Chauhan, a partner at UHY Hacker Young, noted that tax authorities expect crypto investment to be rife with tax evasion.

How HMRC is getting the data

UK-based crypto exchanges are required to share customer transaction data with HMRC. International organizations and bilateral tax treaties give HMRC access to data from exchanges operating in other jurisdictions.

HMRC has also signaled that this isn’t a one-off campaign. An additional wave of nudge letters is scheduled to run from July 2026 through March 2027.

Why this matters for crypto investors

Token-to-token swaps are a particular blind spot. Someone who traded ETH for a smaller altcoin in 2024 may not have realized they crystallized a gain on their ETH position at the point of the swap.

The letters themselves don’t carry penalties. But ignoring them is a different story. If HMRC follows up with a formal investigation and finds unreported gains, penalties can range from a percentage of the unpaid tax to criminal prosecution in extreme cases.

The UK isn’t acting in isolation. Tax authorities across the OECD are moving toward standardized crypto asset reporting frameworks, with the Crypto-Asset Reporting Framework (CARF) set to facilitate automatic information exchange between participating countries.