HMRC Steps Up Pressure on Crypto Investors as Warning Letters Rise to 81,000

HM Revenue & Customs is increasing its scrutiny of cryptocurrency investors, with 81,000 warning letters sent in the latest year, according to analysis from UHY Hacker Young. The figure represents a 25% increase on the previous year and comes ahead of a major expansion in international crypto tax reporting from 2027.

HMRC is stepping up its investigations into cryptocurrency investors suspected of underpaying tax, according to new figures from national accountancy group UHY Hacker Young.

In the latest 12-month period, HMRC sent approximately 81,000 “nudge” letters to crypto investors, up from around 65,000 the previous year and 27,714 in 2023/24.

These letters are issued to individuals HMRC believes may have failed to report taxable crypto income or gains, giving them an opportunity to review their affairs and make a disclosure before a formal investigation begins.

Crypto tax rules remain widely misunderstood

UHY Hacker Young says many investors still underestimate how frequently crypto transactions can create UK tax liabilities.

A taxable event can arise not only when cryptocurrency is sold for cash, but also when one digital asset is exchanged for another. Income earned through activities such as crypto lending may also be taxable depending on the circumstances.

Neela Chauhan, Partner at UHY Hacker Young, said:

“The tax treatment of cryptocurrency in the UK is complex, and many individuals do not fully understand their reporting obligations or recognise when transactions give rise to taxable income or gains that must be disclosed to HMRC.”

She added that some investors mistakenly assume transactions carried out through overseas exchanges fall outside HMRC’s reach.

UK residents are generally liable for UK tax on worldwide income and gains, meaning using a non-UK exchange does not automatically remove reporting obligations.

International reporting set to increase HMRC visibility

The pressure on crypto investors is expected to intensify further in 2027.

From 31 May 2027, HMRC is due to begin receiving additional crypto transaction data under expanding international reporting arrangements.

According to UHY Hacker Young, information is expected from exchanges across dozens of jurisdictions, giving HMRC access to more detailed investor records.

The data may include identifying information and transaction histories, significantly improving HMRC’s ability to compare crypto activity with declared tax positions.

Chauhan said:

“Once HMRC has this data, tax investigations into cryptocurrency investors will become much easier to target.”

The move reflects a wider global shift towards greater transparency in digital-asset markets as tax authorities seek to bring crypto activity into established financial reporting frameworks.

Investors encouraged to review historic transactions

HMRC has a dedicated disclosure service for individuals who believe they may owe tax on cryptoassets.

UHY Hacker Young notes that individuals who approach HMRC before being contacted may face lower penalties than those who disclose only after an investigation or warning letter has begun.

The accountancy group is therefore encouraging investors with significant historic crypto activity to review their records, particularly where transactions involve token swaps, overseas exchanges, lending, staking or other sources of crypto-related income.

The increased use of warning letters indicates that HMRC is moving towards a more systematic approach to crypto tax enforcement.

For investors, the message is becoming increasingly clear: activity on digital-asset platforms should no longer be assumed to sit outside mainstream tax scrutiny.

About UHY Hacker Young

UHY Hacker Young is one of the UK’s leading accountancy networks, providing audit, tax and business advisory services through offices across the country. The group is also a founding member of the UHY International network.