UK government sends 65,000 tax letters at once: warning cryptocurrency users to file their taxes honestly
The British government recently sent 65,000 crypto tax reminder letters, triggering profit tax compliance alerts.
(Preliminary summary: The Bank of England plans to "limit stablecoin holdings" and caused public outrage: It will not work at all and will only fall behind the global encryption competition)
(Background supplement: Financial Times: The United Kingdom plans to fully regulate cryptocurrency in 2026, relax some principles, and strengthen targeted supervision)
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This week an official document from the London government sparked discussion in the crypto market: Her Majesty's Revenue and Customs (HMRC) Strongly worded “reminder letters” were sent to 65,000 investors suspected of failing to declare cryptocurrency taxes. This number not only more than doubled the previous year, but was eight times that of 2021-22, demonstrating the UK’s determination to conduct crypto tax audits.
HMRC strikes hard, warning of a surge in reminder letters
According to The Block, the 65,000 letters sent in the 2024-25 tax year significantly exceeded the approximately 27,700 letters sent in the 2023-24 year. These letters are warnings before a formal investigation. They are more like a final "surrender window" than direct fines or criminal penalties.
The reason why HMRC can quickly expand its actions is closely related to its improvement in its ability to obtain exchange data. Neela Chauhan, partner at UHY Hacker Young, said bluntly:
"HMRC obtains data directly from cryptocurrency exchanges and is actively identifying tax evasion cases."
CARF framework rewrites the rules of the game
The British action echoes global trends. The "Crypto-Asset Reporting Framework" (CARF) promoted by the Organization for Economic Cooperation and Development (OECD) has been agreed by about 70 countries. Starting from January 1, 2026, exchanges and custody wallet providers will have to report user and transaction details to tax authorities.
According to JD Supra’s analysis, the first batch of reports must be submitted before May 31, 2027. After that, countries will automatically exchange information, and the space for cross-border tax avoidance will be greatly reduced. It is estimated that from 2026 to 2030, CARF can inject about 350 million pounds in tax revenue for the UK, becoming a new source of national treasury.
The dividing line between capital gains and income income
In the face of rising audits, investors need to understand two tax items: capital gains tax (CGT) and income tax. According to Koinly guidance, profits from the sale, exchange, consumption or gift (to non-spouse) of cryptocurrency are subject to capital gains tax. The CGT allowance for 2024-25 is only £3,000, with the excess taxable at 18% or 24% depending on the individual income level.
Staking, mining, partial airdrops or receiving cryptocurrency as a salary is considered income and is subject to a stepped tax rate of 0% to 45%, with an annual tax exemption of £12,570. For example, if an investor earns £1,000 from staking, it must be included in the annual income; if a profit of £5,000 is made from selling Bitcoin at the same time, of which £2,000 exceeds the CGT exemption amount, 18% or 24% tax must be paid according to regulations.
Emergency strategies, keep records to be prepared
The global nature of CARF means that even non-UK residents cannot take it lightly. In the future, countries may lock in undeclared income through data exchange, integrate transaction records in advance and review their own tax status, so as to reduce risks in the wave of transparency.
The UK’s 65,000 reminder letters sounded the alarm, announcing that the encryption world has entered a new normal of “compliance and transparency.” Actively grasping tax laws, making good use of tools, and making early corrections will be the talisman for investors to survive the regulatory wave.
