If you’ve been dabbling in crypto, HMRC might soon come knocking.
In its latest push to improve tax compliance, HMRC has sent out over 65,000 “nudge” letters to individuals it suspects of underpaying tax on cryptocurrency gains.
What’s Happening?
HMRC now receives detailed data from UK and overseas crypto exchanges, meaning they can easily identify who’s been buying, selling, and cashing out digital assets.
These letters aren’t random, they’re targeted. HMRC’s message is simple: “We know you’ve been trading. Are you sure your tax return reflects that?”
Who’s being targeted?
The campaign is aimed mainly at casual or “hobby” traders, people who might have made a few trades or cashed in some crypto without realising the tax implications.
But make no mistake:
If you’ve sold, swapped, or spent crypto for a profit, you could have a Capital Gains Tax (CGT) liability.
How Crypto is Taxed
In short:
Buying and holding – no tax until you sell or exchange.
Selling, swapping, or spending – that’s a taxable event.
Mining, staking, or earning crypto – often Income Tax and sometimes CGT too.
HMRC expects you to keep detailed records of every transaction, including crypto-to-crypto trades, which can add up fast.
Why It Matters
The nudge letters give taxpayers a chance to come clean voluntarily before HMRC opens an official investigation.
Once that happens, penalties rise sharply, especially if HMRC believes there’s been carelessness or deliberate underreporting.
What You Should Do Now
If you’ve received one of these letters, or you’ve traded crypto at any point in recent years:
Gather your records – from exchanges, wallets, and apps.
Review your tax position – even if you think your gains were small.
Get advice – the line between income and capital treatment isn’t always straightforward.
Act early – voluntary disclosure can save you significant penalties (and a lot of stress).
Our Take
Crypto might be new territory for many investors, but HMRC’s approach is very familiar… data-driven, methodical, and relentless.
If you’ve been involved in crypto trading and aren’t sure where you stand, now’s the time to get ahead of the curve.
At Cedar + Co, we can help you:
Review your crypto transactions
Calculate any potential tax exposure
Prepare voluntary disclosures where needed
Put systems in place to keep compliant going forward
Don’t wait for a letter to arrive, get in touch with our team today to discuss your crypto position confidentially.
