UK tax service issued 81,000 warning letters to crypto holders in past year

The UK's Her Majesty's Revenue and Customs sent more than 81,000 warning letters to crypto holders suspected of owing unpaid taxes during the 2025/2026 financial year, according to Protos. The volume represents a threefold increase from 27,714 letters issued in 2024.

HMRC attributes most of the suspected unpaid taxes to gains made during the crypto bull run between 2022 and 2025, per Protos reporting. The letters remind UK crypto users that if they sell, give away, exchange, or make a purchase with crypto, they may need to pay capital gains tax.

Failure to pay owed taxes carries penalties of up to 100 percent of the tax owed plus interest, with the penalty increasing when offshore transfers are involved, according to the reporting.

Neela Chauhan, a partner at accounting firm UHY Hacker Young, told Protos that many crypto traders are young, have little prior exposure to HMRC, and often operate under the assumption that the tax authority has limited visibility into their activities. Chauhan stated that tracking unpaid taxes from wealthy crypto users will be like "shooting fish in a barrel" once HMRC acquires new powers next year, per Protos.

Those powers will force offshore crypto firms to divulge customer information to HMRC. The tax authority estimates the new enforcement capability will raise £315 million by 2030, according to Protos reporting.

Meanwhile, MPs representing a crypto and digital assets all-party parliamentary group have complained to UK banks about restrictions on crypto transactions. The MPs claim there have been "repeated instances" where crypto firms struggle to open bank accounts, and that these restrictions "could be one of the single biggest barriers to growth for UK crypto and digital asset businesses," per Protos.