The UK tax authority, HMRC, has increased its crypto enforcement efforts by 25% year-over-year, sending 81,000 warning letters to crypto holders over the latest 12-month period. These letters target individuals suspected of underreporting Capital Gains Tax on digital asset transactions, including selling, swapping, or earning income from crypto. Since 2020, HMRC has sent over 101,000 such letters, with the majority focusing on CGT obligations arising from crypto disposals, such as selling Bitcoin or swapping one token for another.
Crypto Tax Enforcement
According to Neela Chauhan, a partner at UHY Hacker Young, tax authorities expect crypto investment to be rife with tax evasion, prompting HMRC to require UK-based crypto exchanges to share customer transaction data. International organizations and bilateral tax treaties also provide HMRC with access to data from exchanges operating in other jurisdictions.
Upcoming Campaigns
HMRC has scheduled an additional wave of nudge letters to run from July 2026 through March 2027, signaling that this is not a one-off campaign. Token-to-token swaps are a particular area of focus, as they can crystallize gains on the original token position at the point of the swap. While the letters themselves do not carry penalties, ignoring them can lead to formal investigations and potential penalties, ranging from a percentage of the unpaid tax to criminal prosecution in extreme cases. The UK's efforts are part of a broader trend, with tax authorities across the OECD moving toward standardized crypto asset reporting frameworks, including the Crypto-Asset Reporting Framework (CARF).
