Key Notes
- HM Revenue & Customs (HMRC) sent out 65,000 crypto tax warning letters last year.
- The previous year, the agency sent out only 27,700 letters.
- The growing crypto adoption and asset price surge mandate this move.
Crypto firms in the UK are facing challenges as tax authorities in the region intensify warnings about unpaid gains. Reports show that these digital asset firms received more warning letters from the HM Revenue & Customs (HMRC) last year than they did the previous year. This reflects the UK government’s commitment to ramp up its scrutiny of crypto investors.
HMRC Sends Out 65,000 Warning Letters
In a Financial Times report from October 17, it was stated that the HMRC sent out 65,000 letters to crypto investors and organizations in the 2024–25 tax year.
This corresponds with almost a 140% increase from the previous year, as only about 27,700 warning letters were issued at the time. Within the last four years, this agency has sent out over 100,000 such letters.
These warning letters or “nudge letters,” as they are called, are meant to prompt investors to voluntarily correct their tax filings.
If the appropriate actions are not carried out, a formal investigation follows. This percentage increase in the number of letters suggests that the volume of tax defaulters is increasing.
More so, it shows that the UK’s HMRC is giving considerable attention to crypto-related tax compliance.
Rising Crypto Adoption Demands Increased Scrutiny
As crypto adoption and the prices of digital assets increase, the agency sees the need to ensure that taxes are appropriately filed. For instance, it was estimated by the Financial Conduct Authority (FCA) that about 7 million UK adults hold crypto.
This is a remarkable increase from 2022, when it was only 10% (5 million) of the population, or 2021, when it was just 4.4% (2.2 million). Overall, this shows the growing interest in digital assets.
On the other side of affairs is Ohio, where lawmakers have introduced a bill that would exempt cryptocurrency transactions from state taxes. The goal is to position the state as a leader in digital asset adoption.
Per the bill, Bitcoin (BTC), Ethereum (ETH), and stablecoins were classified as “digital assets” and therefore should receive the same tax treatment as traditional fiat currencies, with no additional levies.
