UK tax authority sends 65,000 letters to suspected crypto tax evaders, more than double last year's count: FT

HM Revenue & Customs (HMRC), the UK tax authority, has sent out 65,000 letters to crypto investors suspected of owing taxes on their holdings, an increase of 134% compared to the year prior, according to a report from the Financial Times. 

Accounting firm UHY Hacker Young filed a Freedom of Information Act request to obtain the figures, and the FT reports that the "nudge" letters are typically sent out to individuals suspected of tax avoidance or evasion before a formal investigation is launched. 

Neela Chauhan, a partner at UHY Hacker Young, told the FT that HMRC receives data from crypto exchanges directly, and is likely using that data to find cases of tax avoidance. India's tax authority is likewise targeting more than 400 suspected tax evaders likely using data received directly from Binance, indicating that tax agencies around the world have better access to crypto trading data than in prior years. 

Starting in Jan. 2026, HMRC will also receive detailed user information from exchanges as part of the Crypto-Assets Reporting Framework (CARF) adopted by about 70 jurisdictions, including OECD members. Under the framework, crypto exchanges will report information on crypto traders and their activity to national tax authorities. The agency will collect data throughout 2026, with the first filing set for May 31, 2027. 

The UK's complicated crypto tax scheme treats most personal-use crypto as an investment, so selling, swapping, or spending it is a "disposal" that triggers Capital Gains Tax (CGT). “Earning” crypto through mining, staking rewards, some airdrops, and employment can be considered income, subject to a separate income tax. The CGT rates were raised last autumn, from a 10% basic-rate and 20% higher-rate for disposals before Oct. 30, 2024, and 18% basic/24% higher for disposals after that date. 

Meanwhile, the UK financial regulator recently lifted its four-year ban on crypto-based exchange-traded notes (ETNs), opening the door for asset managers to offer crypto ETNs to retail traders on the London Stock Exchange, with some asset managers already receiving approval to offer their products to retail investors. IG Group research projects that the country's crypto industry could grow by up to 20% in the wake of the change.