HMRC is dramatically increasing enforcement on digital assets, including on those who may not realise they owe any tax at all.
Crypto’s pseudo-anonymous and complex nature means many people do not pay the right tax on holdings. UK government estimates suggest non-compliance with the tax rules could range from 55% to as high as 95% among crypto asset investors.
Many investors are likely to be unintentionally underpaying taxes on their crypto assets, especially capital gains tax (CGT), but nevertheless risk penalties and surprise tax bills.
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We look at ways to reduce your capital gains tax bill in a separate article.
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HMRC crypto crackdown
HMRC is increasingly intervening to claw back the tax it is owed. It sent as many as 101,024 CGT warning or ‘nudge’ letters to investors in crypto assets between 2020 and 2025, according to new Freedom of Information (FOI) data obtained from HMRC by comparison platform BrokerChooser.
This is more than 40 times the amount issued for shares and securities (2,358), suggesting crypto investors are now HMRC’s largest capital gains tax compliance target, far overtaking traditional assets such as stocks and property.
The number of crypto-related nudge letters HMRC sent more than tripled between 2021/22 (8,329) and 2023/24 (27,712), before soaring to 64,982 letters in 2024/25, an increase of 680% in just three to four years.
Over 560 times more letters were sent regarding crypto than traditional share disposals in the financial year 2023/24, with just 49 letters issued for shares and securities compared to 27,713 crypto letters.
Adam Nasli, head broker analyst at BrokerChooser, said: “To ensure you stay tax-compliant in 2026, we urge investors to keep detailed records of all purchases, sales, swaps, transfers and payments made using cryptocurrency.
“Many investors assume small trades don’t count, but even simple swaps can trigger tax liabilities. Investors must review official guidance or seek professional advice to ensure gains are reported correctly.
“If you think you may have underreported crypto gains, we recommend using HMRC’s voluntary disclosure service to reduce penalties. By proactively disclosing errors, you can reduce penalties for careless mistakes to as low as 0% and for deliberate actions to between 20% and 70%.”
Confusion on crypto asset tax rules
While crypto enforcement has soared in 2024/25, it remains likely that many letters may have been issued for unintentional non-compliance.
Confusion around crypto tax rules is widespread. When HMRC published its research report on the uptake and understanding of crypto assets in the UK in 2022, only 50% were aware tax liabilities can arise when converting crypto assets into fiat currency like pounds sterling.
Only 28% had seen HMRC's guidance on the tax treatment of crypto assets, and only 16% had sought tax advice in respect of their crypto assets. Capital gains tax is the principal tax that will likely apply to individual investments in crypto assets, but 59% of crypto asset owners said they know little or nothing about CGT.
But while there may be honest mistakes, HMRC can still impose penalties if you did not take “reasonable care” to check your tax liability.
How crypto investors can reduce their tax penalty risk in 2026
To avoid a surprise tax penalty for non-compliance with the rules, crypto investors are being urged to ‘TRACK’ their investments in 2026:
1. Track every crypto transaction
2. Remember that token swaps can trigger tax
3. Account for everyday crypto use
4. Check HMRC guidance
5. Keep mistakes transparent
MoneyWeek has contacted HMRC asking for comment.
