More than 80,000 crypto traders told to cough up tax in HMRC crackdown
More than 81,000 letters were sent to cryptocurrency holders in the past year warning them that they may owe tax, new data has shown.
A freedom of information (FOI) request seen by the BBC has revealed the number of letters sent by HM Revenue and Customs (HMRC) had almost tripled since 2024.
For several years, the unregulated environment of crypto trading - which includes Bitcoin, Ethereum and thousands of smaller crypto coins - was one traders rarely bothered to report their gains from, but the demands on traders are effectively the same as those who buy and sell shares on the stock market outside of an ISA: capital gains should be declared, with tax paid, on amounts which surpass CGT thresholds.
“There is the expectation amongst tax authorities that cryptocurrency investment is rife with tax evasion,” said Neela Chauhan, of UHY Hacker Young, who requested the FOI.
“A lot of the traders are young, have had little previous exposure to HMRC and often work under the assumption that HMRC has limited visibility over their activities.”
Cryptos are known as volatile assets. Over the past five years, Bitcoin is up 41 per cent, though is down 39 per cent in the past 12 months; Ethereum is down 31 and 48 per cent over the same timeframes respectively – but is up 19.5 per cent in the past week.
Such volatility makes them higher-risk, but also brings the prospect of big profits – which for a basic-rate taxpayer means 18 per cent tax would be due on any profits made beyond the £3,000 personal allowance. Higher- and additional-rate taxpayers pay a 24 per cent CGT rate above the same tax-free allowance.
From March 2027, however, HMRC will find it much easier to find and target individuals who do owe tax, as crypto platforms located outside the UK will be tasked with sharing information about customers.
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“Once HMRC has this data, tax investigations into cryptocurrency investors will be like shooting fish in a barrel,” warned Ms Chauhan.
It has been estimated that up to £315m would be raised by 2030 with the new tax income.
Cryptocurrency traders or investors can self-report gains and any tax due through a self-assessment tax return, which is due for each financial year by the following 31 January.
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