Will Keir Starmer come for your cryptocurrencies? Fears of a cryptocurrency tax raid in the UK are growing, as HMRC cryptocurrency tax letters are distributed to 65,000 UK cryptocurrency traders.
Britain’s cryptocurrency tax authority, HMRC, has doubled the number of warning letters it sends, signaling a tougher approach to undeclared gains on digital assets under the new government.
According to a Financial Times report, HM Revenue & Customs (HMRC) has issued around 65,000 “nudge” letters to residents suspected of underreporting cryptocurrency profits for the 2024-25 tax year, more than double the 27,700 sent the year before.
The campaign aims to push more investors to voluntarily disclose their earnings as HMRC gains wider access to data on cryptocurrency exchanges.
Reduced capital gains tax (CGT) relief has also widened the net, bringing more traders into the tax system.
The Financial Conduct Authority estimates that around 12% of British adults, around 7 million people, now hold cryptocurrencies, highlighting the scale of those who could be affected.
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How will the new UK cryptocurrency tax rules impact traders in 2025?
According to HMRC rules, CGT applies when investors sell cryptocurrencies, exchange one token for another, use it for purchases, or give it away, except in limited cases.
From the 2024-25 tax year onwards, self-assessment forms include a section dedicated to crypto assets, making it easier for both reporting and review by HMRC.
The UK’s latest cryptocurrency tax push is widening the net for traders. Capital Gains Tax (CGT) allowance has fallen dramatically to £3,000 for the 2024/25 and 2025/26 tax years, down from £12,300 just two years ago.
This means more people will now have to declare their cryptocurrency earnings to HMRC. The increase in tax letters comes as the UK prepares to implement the Crypto-Asset Reporting Framework (CARF) from 1 January 2026.
The system will force domestic crypto platforms to collect and share detailed user and transaction data with HMRC and international partners.
Therefore, from the start of the new tax year on 6 April 2026, due to HMRC rules, cryptocurrency ETNs will NOT be able to be held within a UK ISA.
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Notably, the new rules will also exclude cryptocurrency ETNs from UK ISA investments, placing further pressure on UK cryptocurrency investors.
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What does HMRC’s £100 million cryptocurrency tax plan mean for traders?
According to HMRC, the CARF is designed to “provide visibility into cryptoasset user transactions”. Those who do not comply could face fines, while the shared data will help identify cross-border tax evasion.
Treasury estimates suggest the new rules could generate £40m in 2026-27, rising to £110m in 2027-28, before settling at around £80m a year by 2029-30. This wider crackdown is part of the Labor government’s plan to reduce the tax gap.
THE Spending review 2025 provides funding for 5,500 new compliance officers and 2,400 debt managers, with the aim of achieving an additional £7.5 billion in annual revenue by the end of the decade.
By sending out 65,000 letters, double the number last year, HMRC aims to combine law enforcement with deterrence. With new data-sharing powers and deeper access to exchange records, traders will find it much more difficult to hide unreported crypto profits.
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