UK Crypto Buyers Might Nonetheless Owe Taxes Regardless of No HMRC Warning Letter

UK crypto buyers might face tax payments even when they haven’t obtained warning letters from HM Income & Customs (HMRC), because the company steps up efforts to trace undeclared digital asset revenue.

Final week, the Monetary Instances revealed that HMRC issued almost 65,000 “nudge letters” within the 2024–25 tax yr, greater than double the quantity despatched the yr earlier than. The letters urge buyers to evaluate their filings and voluntarily declare crypto-related beneficial properties earlier than potential audits start.

Nonetheless, tax specialists warn that the company’s rising use of change information and worldwide reporting agreements implies that buyers who haven’t obtained a letter shouldn’t assume they’re within the clear.

“Not reporting cryptocurrency transactions to HMRC is illegitimate, no matter whether or not you’ve been contacted but,” Andrew Duca, founding father of the crypto tax platform Awaken Tax, informed Cointelegraph. “So even in the event you haven’t obtained a warning letter, the truth that HMRC has issued so many this yr ought to function a wake-up name,” he added.

Duca famous that HMRC sometimes identifies noncompliance by evaluating financial institution data, change information, and self-assessment kinds. Discrepancies, comparable to undeclared deposits or transfers, can set off letters or formal investigations.

Larger earners and buyers with massive onchain portfolios are particularly prone to be focused as information sharing between exchanges and regulators will increase, he mentioned.

Associated: How you can file crypto taxes in 2025 (US, UK, Germany information)

HMRC tightens crypto oversight

Exchanges working within the UK and people serving UK prospects overseas are legally required to supply transaction information to HMRC. With the OECD’s Crypto-Asset Reporting Framework (CARF) set to take impact in 2026, the company will achieve automated entry to info from world buying and selling platforms.

“It’s much better to be proactive and report in your exercise now, reasonably than watch for HMRC to tug you up on it,” Duca mentioned.

He famous that crypto exercise turns into taxable not solely when digital property are transformed to kilos, but in addition after they’re swapped between tokens or generate revenue by means of staking, airdrops, or yield farming. Solely purchases made with fiat forex or transfers between private wallets are exempt.

To calculate beneficial properties, HMRC applies a three-tier “spooling” methodology. This consists of assessing same-day trades first, then transactions inside a 30-day window, and at last utilizing a median value for older purchases. For energetic merchants, this course of can turn into extremely complicated, and Duca recommends utilizing specialist tax software program designed for crypto reporting.

Associated: New York State senator proposes tax on crypto mining power use

What to do if contacted

Duca mentioned buyers who obtain an HMRC letter are finest suggested to hunt skilled recommendation instantly. Specialist accountants may help put together correct transaction experiences and negotiate with the tax workplace if underpayment is found. Failure to reply could result in penalties or additional investigation.

“Utilizing crypto tax software program may also aid you to generate correct experiences of all of your exercise as precisely and effectively as potential,” Duca mentioned. “Lastly, it is advisable to be ready to pay. When you owe taxes, you’ll have to settle them.”

Duca added that decentralized exchanges (DEXs) and chilly wallets aren’t exempt from HMRC reporting necessities. “You might be legally required to report on all DEX transactions, chilly pockets exercise and scorching pockets transfers,” he mentioned.

In the meantime, within the US, senators are exploring updates to crypto tax coverage, together with exempting small transactions from taxation and clarifying how staking rewards are handled.