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The U.K.’s tax authority has sharply escalated its oversight of digital asset activity, issuing nearly 65,000 warning letters to cryptocurrency investors in the 2024–25 tax year — a 134% increase from the previous year’s 27,700 notices.
The letters, disclosed via a Freedom of Information request by accounting firm UHY Hacker Young, signal HM Revenue & Customs’ (HMRC) strengthened focus on crypto tax compliance as digital asset ownership expands across the country. The notices serve as “nudge letters,” encouraging investors to correct tax filings voluntarily before a formal investigation begins.
Crypto ownership in the U.K. continues to climb rapidly. The Financial Conduct Authority now estimates 7 million adults hold some form of cryptocurrency — more than triple the figure in 2021. HMRC, meanwhile, has broadened its surveillance tools, receiving transaction data directly from major exchanges to identify discrepancies between trading activity and tax reporting.
According to UHY partner Neela Chauhan, many investors remain unaware that even coin-to-coin swaps are taxable events under U.K. capital gains rules — a misunderstanding that frequently leads to accidental noncompliance.
HMRC’s visibility into the market is set to expand further in January 2026, when the OECD’s Crypto-Assets Reporting Framework (CARF) comes into force across roughly 70 jurisdictions. The standard will require exchanges to report detailed user information, with initial filings due by May 2027.
Under U.K. tax law, most crypto holdings are treated as investments, meaning disposals through selling, swapping, or spending trigger capital gains tax liabilities. Mining income, staking rewards, airdrops, and employment-related crypto earnings fall under income tax rules. Capital gains tax rates also increased last autumn to 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
The tightening UK regime aligns with growing global scrutiny. U.S. lawmakers are considering exemptions for small crypto transactions, while South Korea has warned that even assets held in cold wallets may be seized to settle unpaid taxes.
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