HMRC have previously issued large volumes of one-to-many ’nudge’ letters, text messages and notifications on the HMRC app to individuals they believe may have failed to declare income or gains from cryptoassets, based on third party data they have received. Between July 2026 and March 2027, HMRC are issuing another wave of these nudge letters to those they believe have not correctly reported income and gains from their cryptoasset holdings.
A common misconception is that cryptoassets sit outside the mainstream tax system. They do not. HMRC do not regard cryptoassets as currency or money. Instead, their tax treatment depends on the nature of the asset and how it is held, transferred or disposed of. Depending on the facts, transactions may give rise to capital gains tax or, in some cases, income tax, particularly where activities involve trading, mining, staking or airdrops.
Many taxpayers also underestimate what constitutes a taxable disposal. While selling crypto for sterling is the most obvious example, it is far from the only one. Exchanging one cryptoasset for another, using crypto to purchase goods or services, or transferring tokens in certain circumstances can all trigger a tax charge. Investors who have moved assets between wallets, exchanges and DeFi platforms without maintaining detailed records may therefore face significant compliance risks.
HMRC’s compliance focus is sharpening because their visibility over crypto transactions continues to improve. They already receive information from crypto exchanges and other intermediaries and have used that data to support both nudge letter campaigns and formal enquiries.
That visibility is set to increase further with the introduction of the Cryptoasset Reporting Framework (CARF). UK reporting under CARF commenced on 1 January 2026, with the first reports due by 31 May 2027, followed by international exchanges of information later that year. Separate domestic reporting obligations for UK users also took effect from 1 January 2026, significantly expanding the information available to HMRC. As HMRC begin to receive and analyse this data, further nudge letter campaigns and increasingly targeted compliance activity are likely to follow.
The practical implication for taxpayers is straightforward: individuals who have not fully reported crypto income or gains should review their position before HMRC do it for them. Where a taxpayer’s position is historical, a disclosure is likely to be required to HMRC, and it is important that specialist advice is sought when dealing with this. HMRC, in some instances, could charge penalties of up to 100 percent of the tax due.
The era of crypto opacity is rapidly coming to an end. HMRC’s recent nudge campaign should not be viewed as routine correspondence. This is an early indication of a far more data-driven and proactive compliance environment, one in which historic crypto transactions are becoming increasingly visible to the tax authorities.
