HM Revenue & Customs (HMRC) has issued 65,000 ‘nudge’ letters to cryptocurrency traders suspected of underpaying tax on their gains. With an estimated £12.9 billion in crypto assets now held by UK taxpayers – an increase of £5.1 billion since 2022 – these letters highlight HMRC’s growing focus on addressing the sharp rise in undeclared Capital Gains Tax (CGT).
The campaign comes ahead of new rules under the OECD’s Cryptoasset Reporting Framework (CARF), which take effect on 1 January 2026. The timing signals HMRC’s intent to intensify compliance efforts well before the disclosure deadline.
Under CARF, crypto platforms will be required to report detailed user and transaction data to HMRC, with penalties for non-compliance. This will provide HMRC with full visibility over crypto transactions, including the type, value, and quantity of assets traded, along with investor details.
51 jurisdictions have committed to implement the CARF in time to commence first exchanges of information by 2027. By facilitating automatic information exchange between jurisdictions, CARF aims to enhance global tax cooperation. Anyone investing in crypto must follow the tax rules or face the consequences.
Timeframe for CARF reporting
Reporting Cryptoasset Service Providers (RCASPs) in the UK are expected to start collecting the information specified in the CARF:
- From 1 January 2026;
- With the first reports covering the 2026 calendar year due to be reported by 31 May 2027.
Tax obligations
At its core, CARF is designed to ensure that individuals report their income and gains accurately.
Do not overlook it – CGT can apply when you:
- Sell your tokens;
- Exchange your tokens for a different type of cryptoasset;
- Use your tokens to pay for goods or services; or
- Give away your tokens to another person (unless it’s a gift to your spouse or civil partner).
To check if you need to pay CGT, calculate the gain for each transaction you make. Your gain is normally the difference between what you paid for an asset and what you sold it for.
Income tax and National Insurance contributions could apply to crypto received from employment, mining, staking or lending activities.
For the 2024–25 tax year, self-assessment forms include a new dedicated section within the Capital Gains pages which must be used to report all crypto-related gains and income.
Next steps
Cryptoassets present unique tax challenges, and it is easy to unintentionally overlook your tax responsibilities.
Now is the time to ensure your tax affairs are in order. Anyone who has invested in or traded cryptoassets should take this opportunity to review their tax position and make any necessary adjustments ahead of the upcoming reporting changes.
Where discrepancies are suspected, tax authorities may review prior years to ensure all liabilities have been met. If historical discrepancies are found, HMRC is likely to issue penalties and charge interest, which can be substantial.
If unpaid tax on cryptoassets is identified, prompt disclosure to HMRC can help mitigate penalties. It is advisable to seek professional advice before proceeding with any voluntary disclosures.
How M+A Partners can help
Understanding your financial position and tax requirements is important when dealing with cryptoassets. Our team is here to help determine the correct tax treatment of any transactions involving cryptoassets, including calculating taxable gains or losses on cryptoassets. We will ensure any gains or losses are correctly recorded and any reliefs that can be claimed are applied.
For any help or guidance please get in touch with your usual M+A Partners contact or email enquiries@mapartners.co.uk.
