HMRC is increasing efforts to track undeclared digital asset income, with nearly 65,000 “nudge letters” sent in 2024–25. Investors are urged to voluntarily declare crypto gains to avoid audits. Noncompliance is illegal, and HMRC uses exchange data to identify discrepancies and trigger investigations, especially for high earners and large portfolios.

Exchanges serving UK customers must provide transaction data to HMRC, which will gain automatic access to global trading platform information through the Crypto-Asset Reporting Framework (CARF) in 2026. Crypto activity becomes taxable when assets are converted, swapped, or generate income, with a three-tier method for calculating gains. Specialist tax software is recommended for active traders.

Investors contacted by HMRC should seek professional advice immediately for accurate transaction reports. Failure to respond may lead to penalties. Crypto tax software helps generate reports efficiently, and taxes owed must be settled. Decentralized exchanges, cold wallets, and hot wallet transfers are not exempt from reporting requirements.

In the US, lawmakers are exploring updates to crypto tax policy, including exempting small transactions from taxation and clarifying staking rewards treatment. Coinbase’s VP of tax urged Congress to adopt a de minimis exemption for transactions under $300. Senate debates include whether everyday crypto payments trigger capital gains tax.

Read more at Cointelegraph: UK Crypto Investors May Still Owe Taxes Despite No HMRC Warning Letter