The UK tax authority has intensified its scrutiny of cryptocurrency investors, doubling the number of warning letters sent to those suspected of underreporting or evading taxes on digital asset gains.
According to the Financial Times on Friday, the HM Revenue and Customs (HMRC) sent nearly 65,000 letters in the 2024-25 tax year, up from 27,700 the previous year, with the data obtained through the Freedom of Information Act.
These letters, referred to as "reminder letters," are intended to prompt investors to proactively correct their tax filings before a formal investigation is initiated.
This significant increase reflects HMRC's growing focus on tax compliance related to cryptocurrencies. Over the past four years, the agency has sent out more than 100,000 such letters, with activity accelerating as cryptocurrency adoption and asset prices have surged.
The Financial Conduct Authority (FCA) estimates that there are currently 7 million adults in the UK holding cryptocurrencies, up from about 10% (5 million) in 2022 or 4.4% (2.2 million) in 2021, indicating a growing interest.
"The tax rules surrounding cryptocurrencies are quite complex, and now there are a large number of people trading cryptocurrencies who do not understand that even converting from one coin to another can trigger capital gains tax," Neela Chauhan, a partner at UHY Hacker Young who submitted the Freedom of Information request, told the Financial Times.
HMRC's visibility into the market has significantly improved. The agency now receives trading data directly from major cryptocurrency exchanges and will automatically obtain global exchange data in 2026 under the OECD's Crypto-Asset Reporting Framework (CARF).
US senators are exploring updates to cryptocurrency tax policies, including tax exemptions for small transactions and clarifications on the treatment of staking rewards.
At a Senate Finance Committee hearing earlier this month, lawmakers debated whether everyday cryptocurrency payments should trigger capital gains tax and how to fairly classify income generated from staking services. Coinbase's tax vice president, Lawrence Zlatkin, urged Congress to adopt a minimal exemption for cryptocurrency transactions under $300.
Meanwhile, the National Tax Service (NTS) of South Korea has also strengthened its crackdown on cryptocurrency tax evasion, warning that even assets stored in cold wallets will be seized if they are related to unpaid taxes.
Related: Japan's Financial Services Agency considers allowing banks to hold cryptocurrencies like Bitcoin (BTC).
Original: “UK tax authority doubles crypto warning letters as crackdown on unpaid tax gains intensifies”
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