What do I need to do with my HMRC Cryptocurrency letter?

If you have received a letter, email or other communication from HMRC about your cryptocurrency, don't ignore it.

HMRC is increasingly using information from cryptoasset providers to identify taxpayers who may have undeclared income or capital gains. And you don't need to be a crypto millionaire to find yourself on HMRC's radar.

Cryptocurrency may once have seemed outside the traditional financial system. Those days are gone.

Crypto Is on HMRC’s Radar

HMRC's latest figures show the scale of taxable cryptoasset gains.

For 2024/25, 17,600 individuals reported capital gains tax transactions involving cryptoassets, with declared gains totalling £1.38 billion. Of these, 240 individuals reported gains of more than £1 million.

But this isn't just about the very wealthy.

More than 81,000 crypto investors have received HMRC warning or “nudge” letters concerning suspected unpaid tax.

The message is clear: if you have cryptoassets, you need to understand your tax position. HMRC certainly does.

Why Might HMRC Contact You?

HMRC may contact you because information available to it suggests you have been involved in cryptoasset transactions with potential tax implications.

That doesn't necessarily mean you've done anything wrong or that you definitely owe tax. But it does mean you should take the communication seriously and check your position.

HMRC may have information about transactions you haven't included on your tax return. Alternatively, you may simply be unsure whether your crypto activity needs to be reported.

Either way, ignoring the letter isn't a good option.

“But I Never Took the Money Out”

One of the biggest misconceptions about crypto taxation is that tax only arises when you convert cryptocurrency into pounds and transfer the money to your bank account. That isn't necessarily the case.

Exchanging one cryptoasset for another can potentially create a Capital Gains Tax liability. Using cryptoassets to purchase goods or services can also potentially be a taxable sale of the asset.

So, if you bought Bitcoin, exchanged some for another cryptocurrency and never transferred anything to your bank account, there may still be tax to consider.

Crypto Transactions Can Get Complicated

The tax position can become difficult when there have been numerous transactions.

You may have:

• Bought cryptocurrency at different times and prices

• Sold some at a profit

• Exchanged one cryptoasset for another

• Transferred assets between different wallets

• Made gains on some transactions and losses on others

• Received cryptocurrency through staking, lending or other activities

• Used cryptocurrency to buy goods or services

  
  

Simply looking at how much money went into or came out of your bank account may therefore give you the wrong answer.

Good records matter. Keep details of purchases and disposals, dates, values, transaction fees, the assets involved and the exchanges or platforms used.

HMRC's Information Is Increasing

The UK's Crypto-Asset Reporting Framework (CARF) took effect from 1 January 2026. Reporting cryptoasset service providers must collect information about customers and relevant transactions. The first reports, covering activity during 2026, are due to HMRC by 31 May 2027. CARF forms part of a wider international move towards greater transparency and the exchange of information about cryptoassets.

In other words, HMRC's ability to identify previously undeclared crypto activity is increasing.

Don't Assume It Doesn't Apply to You

You don't have to be a professional crypto trader to have a tax issue.

Perhaps you bought Bitcoin several years ago and have recently sold some. Maybe you've made a handful of trades or exchanged one cryptoasset for another. You may have received cryptocurrency through staking, lending or another activity.

Whatever your circumstances, if there has been taxable income or a taxable disposal, it needs to be considered as part of your tax affairs.

If HMRC Has Contacted You

Don't ignore it. Don't guess. Get advice.

If you have received a letter, email or other communication from HMRC concerning your cryptocurrency activity, speak to us before responding.

We can help you understand what HMRC is asking for, review the relevant transactions and establish whether there is tax to pay or anything that needs to be disclosed.

Crypto may be digital, but the tax consequences are very real.