No HMRC letter? UK crypto investors may still owe taxes, expert warns
UK crypto investors might face tax liabilities even without receiving warning letters from HM Revenue & Customs (HMRC), which is intensifying efforts to monitor undeclared digital asset income. In the 2024–25 tax year, HMRC sent out over double the letters compared to the previous year, advising investors to reassess their filings and voluntarily declare crypto gains to avoid audits. Andrew Duca, the founder of Awaken Tax, emphasized that not reporting cryptocurrency transactions is illegal, regardless of whether a warning letter has been received. HMRC utilizes bank records, exchange data, and self-assessments to detect noncompliance, targeting higher earners and those with significant on-chain portfolios, especially with increasing international data sharing. Furthermore, crypto transactions become taxable not only during conversions to fiat but also when swapping tokens or earning income through staking or yield farming. Investors are advised to report all transaction activities, including those on decentralized exchanges and cold wallets. Seeking professional advice upon receiving an HMRC letter is recommended to navigate potential tax liabilities and avoid penalties.
Source 🔗