UK tax authorities tighten taxation of undeclared crypto investors…warning letters doubled

UK tax authorities are significantly ramping up enforcement of taxation on crypto assets (cryptocurrencies). The number of tax warning letters sent to undeclared investors has more than doubled in a year.

On the 18th (local time), according to crypto-focused media Cointelegraph, HMRC (Her Majesty's Revenue and Customs) sent about 65,000 warning letters to crypto asset investors in the 2024~2025 fiscal year. This is more than double the previous year (27,700).

The so-called 'Nudge Letter' sent by HMRC is a notice intended to encourage taxpayers to voluntarily file or amend returns ahead of a formal investigation. The UK government has sent more than 100,000 warning letters over the past four years and has designated failures to report crypto asset transactions and capital gains as a major enforcement target.

The Financial Conduct Authority (FCA) estimates there are about 7,000,000 crypto asset holders in the country. This is more than double the 2,200,000 in 2021, and analysts say that with the expanded investor base the need for stronger tax oversight has grown.

HMRC's market surveillance capabilities are also rapidly increasing. The authority already receives transaction records directly from major exchanges, and from next year will automatically receive global exchange data under the OECD's 'Crypto-Assets Reporting Framework (CARF)'.

Meanwhile, domestically South Korea's National Tax Service has warned that if unpaid taxes are confirmed it can seize digital assets stored in offline wallets (Cold Wallets), indicating that worldwide strengthening of crypto asset tax base management is underway.