Britain's tax authority has sent more than 81,000 warning letters to crypto investors over the past year, a figure that highlights a sharp rise in official scrutiny of digital asset holdings. A far larger change is approaching: in 2027, the UK and dozens of other jurisdictions are expected to begin automatically sharing crypto account information under a new global tax reporting framework.

The OECD's Cryptoasset Reporting Framework (CARF) will come into effect in the UK in 2027. The UK is one of 46 countries that committed, according to the OECD list of commitments issued in June. A further 29 countries are expected to join in 2028, while the United States is set to become part of the framework in 2029. CARF extends to crypto assets the automatic-exchange model the OECD built for bank accounts under its Common Reporting Standard, a system developed in 2014 that now involves more than 100 jurisdictions. The United States has separately begun requiring custodial crypto brokers to report customers' sales on Form 1099-DA, beginning with transactions in 2025. The UK tax authority, HM Revenue and Customs (HMRC), offers an early look at how enforcement under this framework may play out.

The 81,000 figure and how fast it climbed

The letter count was uncovered through a Freedom of Information request filed by the accounting firm UHY Hacker Young and published on August 20. The number of “nudge letters” sent out by HMRC increased by 25% from about 65,000 letters the previous year. In 2023-24, the total was just 27,714 — a nearly 300% increase in two years.

Nudge letters do not represent official investigations. They offer taxpayers the opportunity to report unpaid tax before HMRC pursues the matter. The tactic is not new: HMRC has sent comparable letters for years, previously targeting holders of offshore bank accounts using internationally exchanged financial data. UHY Hacker Young reported that penalties for voluntary disclosures can be limited to 30% of the total amount of unpaid tax, compared with 70% to 100% once HMRC has intervened.

Neela Chauhan, who is part of the firm, said many holders of cryptocurrencies are young, inexperienced with tax authorities, and believe their actions go unnoticed.

“There is the expectation amongst tax authorities that cryptocurrency investment is rife with tax evasion,” she said.

Why offshore exchanges stop being a shield

HMRC can receive information from UK platforms now, and by 2027 it will be able to access considerably more. UHY expects 52 jurisdictions to provide HMRC with data on UK residents in 2027, including the Channel Islands, the Cayman Islands, Ireland and Liechtenstein. Another 15, including Singapore, Switzerland and Gibraltar, are expected to join in 2028.

The records can be large in scope. In the UK, they would include transaction details alongside identifying information such as names, addresses and National Insurance numbers. Under the framework, the filing obligation sits with crypto-asset service providers — exchanges, brokers and custodial wallet operators — rather than with individual investors. According to Chauhan, the moment HMRC acquires the data, investigations will be “like shooting fish in a barrel.”

The same trend is unfolding across Europe. The EU's DAC8 directive, which draws inspiration from the OECD framework, came into force on January 1, 2026. Member states are expected to exchange information on crypto-assets for the reporting year 2026 by September 30, 2027. In practice, using a platform in one of the participating jurisdictions will provide less and less comfort from the scrutiny of local tax authorities.

What HMRC counts as a taxable event

Part of the compliance problem is that crypto tax rules are easy to misunderstand. Selling crypto for pounds is an obvious taxable disposal, but swapping one token for another can also qualify, as can spending crypto or giving it away. Lending and staking income may fall under separate income-tax rules.

Another common mistake, Chauhan said, is assuming an overseas account falls outside UK tax rules. UK residents are generally taxed on worldwide gains, meaning profits made through foreign platforms can still be reportable at home.

Cryptopolitan reported in January that HMRC had framed its crypto data push as part of an effort to recover about £300 million in tax, with the capital gains tax-free allowance set at £3,000. That allowance has also been shrinking: it was cut from £12,300 to £6,000 in April 2023 and again to £3,000 in April 2024, bringing more modest gains within the charge to capital gains tax.

The April 2027 DeFi change

At the same time, the UK is changing how some decentralized finance activity is taxed. From April 2027, qualifying crypto lending and automated market-making arrangements will receive no-gain, no-loss treatment until an actual economic disposal occurs. The change defers tax rather than eliminating it. The reform follows a Treasury consultation on how crypto lending and staking should be taxed. UHY Hacker Young estimates the revised treatment of crypto lending and liquidity pools could affect about 700,000 people.

For the wider market, the direction is clear. Governments are not only refining crypto tax rules; they are connecting their reporting systems across borders. As those exchanges begin, the long-standing assumption that tax authorities cannot see offshore crypto activity becomes much harder to sustain.

UK crypto-tax enforcement is accelerating

The tax authority recovered more than £8.3 million through settlements in 2024–25 and 2025–26, while crypto-related warning letters climbed from 8,329 in 2021–22 to more than 81,000 in 2025–26. The settlement figures should not be interpreted as HMRC's total crypto-tax revenue.

The available FOI series reports no crypto CGT nudge letters for 2022–23. The warning-letter figures for 2021–22, 2023–24 and 2024–25 come from FOI data obtained by BrokerChooser/UHY Hacker Young. A notable divergence is that settlement collections rose while the number of settlements fell: from 280 settlements to 222, and from £3.5 million to £4.8 million recovered. That means the average recovery per case increased by approximately 73%, from £12,500 to £21,600.

The next major data point is 2027, when CARF reporting starts feeding HMRC standardized crypto transaction data. HMRC says UK reporting cryptoasset service providers began collecting the required information from January 1, 2026, with the first reporting period ending December 31, 2026.

What happens if you pay late?

Receiving a nudge letter is not itself a 15% penalty. The taxpayer generally has an opportunity to correct their position before HMRC moves into formal enforcement.