HM Revenue & Customs (HMRC) has intensified its scrutiny of the crypto sector, sending 65,000 “nudge letters” to investors suspected of underreporting or evading taxes on digital assets, more than double last year’s figure, according to The Financial Times.
The data, obtained through a Freedom of Information Act request by accounting firm UHY Hacker Young, shows a 134% increase in warning notices.
These letters are typically sent before formal investigations begin, urging recipients to review their filings and settle outstanding liabilities.
UHY partner Neela Chauhan said HMRC is leveraging data provided directly by crypto exchanges to identify potential cases of tax avoidance.
The UK’s campaign mirrors global efforts. In India, tax authorities are reportedly pursuing over 400 suspected crypto tax evaders using data shared by Binance.
Both examples highlight how governments are gaining deeper visibility into crypto activity through international data-sharing agreements.
Starting January 2026, HMRC will gain even broader access to information through the Crypto-Assets Reporting Framework (CARF), a global initiative adopted by around 70 jurisdictions, including OECD members.
Under CARF, exchanges will be required to report user and transaction data to national tax authorities, with the first submissions due by May 31, 2027.
The UK’s tax rules classify most crypto assets as investments. Any sale, swap, or purchase made with crypto counts as a disposal subject to Capital Gains Tax (CGT).
Earning crypto through mining, staking, airdrops, or employment is treated as income, taxed separately.
Recent adjustments raised CGT rates to 18% for basic-rate and 24% for higher-rate taxpayers for disposals made after October 30, 2024.
Meanwhile, the UK’s financial regulator has lifted its four-year ban on crypto-based exchange-traded notes (ETNs), allowing asset managers to list products on the London Stock Exchange.
Market analysts at IG Group expect the move to boost domestic crypto activity by as much as 20%, reflecting growing mainstream acceptance despite heightened tax enforcement.
UK to Appoint ‘Digital Markets Champion’ to Oversee Blockchain Transition in Finance
As reported, the UK government plans to appoint a “digital markets champion” to accelerate the nation’s shift toward blockchain-based financial infrastructure, according to remarks by Economic Secretary to the Treasury Lucy Rigby.
The new official will coordinate private sector efforts on tokenizing wholesale financial instruments and ensure that innovation aligns with the country’s regulatory framework.
Speaking at the Digital Assets Week conference in London, Rigby also announced the creation of the Dematerialisation Market Action Taskforce, a new body focused on replacing paper-based share certificates with digital records to enhance market efficiency.
The initiative is part of the UK’s Wholesale Financial Markets Digital Strategy, which outlines plans for issuing blockchain-based sovereign debt known as “digital gilts” under the DIGIT framework.
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