HM Revenue and Customs (HMRC) sent over 81,000 letters to cryptocurrency holders in the past year. These letters warned them they may owe capital gains tax. A Freedom of Information (FOI) request showed this number has nearly tripled since last year. Investors who do not declare profits from cryptocurrency transactions could face fines or prosecution. This applies even if they exchange one cryptocurrency for another.
Key Details
New powers will take effect in 2027. These will help HMRC target wealthy crypto investors more easily. Neela Chauhan, a partner at UHY Hacker Young, said investigations will be like "shooting fish in a barrel." Chauhan pointed out that many young traders lack experience with HMRC. They often think the agency has limited visibility into their activities.
In the 2025-26 financial year, HMRC issued 81,172 warning letters, emails, and text messages. These were sent to investors suspected of underreporting tax. This is a sharp rise from 27,714 in the 2023-24 financial year. An HMRC spokesperson stressed the agency's commitment to ensuring people pay the correct amount of tax. They stated, "the vast majority do." Despite a drop in cryptocurrency values over the past year, HMRC believes there are significant unpaid capital gains. This is from the rise in cryptocurrency prices between December 2022 and October 2025, when Bitcoin increased from about £14,000 to £90,000.
Background
Accountants are advising investors to check their tax obligations. The new powers will make it easier for HMRC to target individuals. Starting in March 2027, cryptocurrency platforms in various countries must share information with HMRC. This will boost the agency's ability to monitor crypto transactions.
Related coverage: EU’s MiCA Regulations Spark Surge in Crypto Scams, UK Lawmakers Demand Answers on Banking for Crypto Firms.
The crackdown on cryptocurrency tax compliance may lead to more scrutiny on crypto assets. This could particularly affect Bitcoin and Ethereum. Investors might face higher compliance costs and possible penalties. These changes may impact trading volumes in the crypto market. Stay tuned for updates on HMRC's new powers and their rollout in March 2027.
Based on reporting by: bbc.com, bbc.co.uk