HM Revenue and Customs has stepped up its focus on cryptocurrency tax compliance, sending 81,000 warning letters to people suspected of underpaying tax on digital asset activity. The total is 25% higher than a year earlier and continues a sharp increase in outreach by the UK tax authority.
The letters, commonly described as “nudge letters,” give recipients a chance to disclose unpaid liabilities before HMRC opens a formal investigation. The latest campaign follows 27,714 letters in 2023-24 and comes after an earlier 65,000-letter push, pointing to sustained and broader scrutiny of crypto users.
What activity can create a crypto tax bill
HMRC’s focus covers more than investors who cash out into pounds. Tax obligations can also arise when one cryptoasset is exchanged for another, when crypto is used to pay for goods or services, and when tokens are transferred to other people.
The amount owed depends on factors including the original acquisition cost, the value at disposal, and any available allowances. Separate income tax rules may also apply to proceeds from crypto lending, staking, and similar activities.
UK residents are taxed on worldwide income and gains, meaning profits linked to offshore platforms can also fall within HMRC’s scope. That point is significant as many crypto users trade or earn rewards through services based outside the UK.
Rule changes planned for 2027
The UK is also preparing changes that will affect how some decentralized finance activity is treated for tax purposes. From April 2027, qualifying crypto loans and automated market-making arrangements are due to receive no-gain, no-loss treatment until an economic disposal takes place.
That change is meant to simplify treatment in specific cases, but it does not remove tax on gains altogether. Instead, the tax event would be deferred until a later disposal that has economic substance. The planned measure could affect about 700,000 individuals.
Global data sharing will widen HMRC’s reach
A further expansion in enforcement is expected through the Cryptoasset Reporting Framework. Under those rules, crypto service providers in the UK will have to collect user and transaction data and report 2026 activity between Jan. 1 and May 31, 2027.
The reporting net will not stop at domestic platforms. International exchanges are also expected to share information on UK residents, which would give HMRC greater visibility into offshore crypto activity that may previously have been harder to track.
HMRC expects to receive data from 52 jurisdictions in 2027, with another 15 due to join in 2028. That timetable suggests the current warning-letter campaign may be only one stage in a broader compliance drive backed by much larger cross-border reporting flows.
What happens next
For now, the immediate step for recipients of HMRC’s letters is the opportunity to disclose unpaid tax before a formal inquiry begins. More broadly, the next confirmed milestone is the 2027 reporting cycle, when UK and overseas platforms begin supplying transaction data under the new framework.
Taken together, the warning letters, the planned DeFi tax adjustments, and incoming international reporting standards show a tax authority preparing for closer oversight of crypto activity across both UK-based and offshore services.
Source: news.bitcoin.com