100,000 capital gains tax warning letters were sent by cryptocurrency investors; are you required to pay taxes?

According to a Freedom of Information request, since 2020, investors in cryptocurrency assets have received forty times as many HMRC capital gains tax warnings as stock traders

HMRC is sharply stepping up its enforcement of digital asset laws, even for people who might not even be aware that they owe any taxes at all.

Due to the complexity and pseudo-anonymity of cryptocurrencies, many people fail to pay the appropriate taxes on their holdings. According to estimates from the UK government, between 55 and 95 percent of investors in cryptocurrency assets may not comply with the tax regulations.

Despite the possibility of penalties and unexpected tax bills, many investors are probably inadvertently underpaying taxes on their cryptocurrency assets, particularly capital gains tax (CGT).

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Crypto crackdown by HMRC.

In an effort to recover the tax it owes, HMRC is getting more and more involved. According to new Freedom of Information (FOI) data acquired from HMRC by comparison platform BrokerChooser, it sent up to 101,024 CGT warning or nudge letters to investors in cryptocurrency assets between 2020 and 2025.

This is more than 40 times the amount issued for shares and securities (2,358), indicating that cryptocurrency investors are now HMRC's top target for capital gains tax compliance, far surpassing more conventional assets like stocks and real estate.

Between 2021 - 2022 (8,329) and 2023 - 2024 (27,712), HMRC sent more than three times as many nudge letters about cryptocurrencies. By 2024 - 2025, that number had risen to 64,982, a 680% increase in just three to four years.

In the fiscal year 2023 - 2024, there were more than 560 times as many letters sent about cryptocurrency as traditional share disposals; only 49 letters were sent about shares and securities, compared to 27,713 letters about cryptocurrency.

"We encourage investors to keep thorough records of all purchases, sales, swaps, transfers, and payments made using cryptocurrency in order to ensure you stay tax-compliant in 2026," stated Adam Nasli, head broker analyst at BrokerChooser.

Even straightforward swaps can result in tax obligations, despite the misconception held by many investors that small trades don't count. To make sure gains are reported accurately, investors should examine official guidelines or consult experts.

We advise using HMRC's voluntary disclosure service to lower penalties if you believe you may have underreported cryptocurrency gains. You can lower penalties for intentional actions to between 20 and 70 percent and for careless errors to as low as 0 percent by proactively disclosing errors. A "

Unclear tax laws pertaining to cryptocurrency assets.

Even though crypto enforcement has increased dramatically in 2024 and 2025, it's still possible that many letters were sent out for inadvertent non-compliance.

Many people are confused about cryptocurrency tax laws. Just 50% of respondents to HMRC's 2022 study on the adoption and comprehension of cryptocurrency assets in the UK were aware that converting cryptocurrency assets into fiat money, such as pounds sterling, may result in tax obligations.

Just 16% of respondents had sought tax advice regarding their cryptocurrency holdings, and only 28% had seen HMRC's guidance on the tax treatment of crypto assets. The primary tax that will probably be applied to individual investments in cryptocurrency assets is capital gains tax (CGT), although 59% of owners of cryptocurrency assets claimed to know very little or nothing about it.

However, if you did not take "reasonable care" to check your tax liability, HMRC may still impose penalties even if you made honest mistakes.