The UK government sends 65,000 tax letters at once: warning Crypto Assets users to report taxes honestly.

The UK government recently sent out 65,000 crypto tax reminder letters, raising compliance awareness regarding profit taxes. (Background: The Bank of England plans to “restrict the holding of stablecoins,” which has angered many: it simply won’t work and will only put the UK behind in the global crypto race.) (Supplementary background: Financial Times: The UK plans to fully regulate cryptocurrencies by 2026, relaxing some principles and strengthening targeted regulation.) A document from the London government this week sparked discussions in the crypto market: HMRC ( sent strong-worded “reminder letters” to 65,000 investors suspected of not reporting crypto tax liabilities. This number not only more than doubled compared to the previous year but is also eight times that of the 2021-22 fiscal year, demonstrating the UK's determination for crypto tax audits. HMRC's aggressive approach has led to a sharp increase in reminder letters. According to The Block, the 65,000 letters sent for the 2024-25 tax year significantly exceed the approximately 27,700 sent in the 2023-24 fiscal year. These letters serve as warnings before formal investigations; rather than direct fines or criminal charges, they resemble a final “self-reporting window.” HMRC's ability to quickly expand its actions is closely related to its improved capability to obtain data from exchanges. Neela Chauhan, a partner at UHY Hacker Young, stated: “HMRC is obtaining data directly from cryptocurrency exchanges and is actively identifying tax evasion cases.” CARF framework rewrites the rules of the game. The UK’s actions resonate with global trends. The “Crypto Asset Reporting Framework” )CARF( promoted by the OECD ) will be adopted by about 70 countries, requiring exchanges and hosted wallet providers to report user and transaction details to tax authorities starting January 1, 2026. According to JD Supra analysis, the first reports must be submitted by May 31, 2027, after which countries will automatically exchange information, significantly reducing cross-border tax evasion opportunities. It is estimated that from 2026 to 2030, CARF could contribute approximately £350 million in tax revenue to the UK, becoming a new source for the treasury. The divide between capital gains and income tax. In the face of escalating audits, investors need to clarify the two tax categories: Capital Gains Tax (CGT) and income tax. According to the Koinly guide, profits from selling, exchanging, consuming, or gifting non-spouse cryptocurrencies are subject to capital gains tax. For the 2024-25 fiscal year, the CGT exemption threshold is only £3,000, with the excess taxed at 18% or 24% depending on the individual's income level. Staking, mining, and receiving cryptocurrencies in the form of part airdrops or wages are considered income, subject to a tiered tax rate of 0% to 45%, with an annual exemption threshold of £12,570. For instance, if an investor earns £1,000 from staking, it must be included in their annual income; if they sell Bitcoin and gain £5,000, with £2,000 exceeding the CGT exemption threshold, they must pay tax at 18% or 24% on that amount as required. Strategic responses: keeping records to be prepared. The global implications of CARF mean that even non-UK residents should not be complacent. Countries may later target undeclared income through data exchanges, and it is essential to proactively integrate transaction records and review one’s tax status to minimize risks in this wave of transparency. The 65,000 reminder letters from the UK serve as a wake-up call, announcing that the crypto world has entered a new normal of “compliance and transparency.” Proactively mastering tax laws, effectively using tools, and making early corrections will be the shield for investors to navigate the wave of regulation safely.