. Key Takeaways

The British crypto sector is on edge for potential tighter tax enforcement and crackdowns at the upcoming U.K. budget.

HMRC issued 65,000 warning letters to suspected crypto tax under-payers in 2024/25.

Crypto leaders caution that rising taxes and regulatory uncertainty are driving investment abroad.

With Chancellor Rachel Reeves preparing her first Budget on Nov. 26, the U.K.’s crypto sector is on alert for signs of tighter tax enforcement and reporting rules.

Recent HM Revenue & Customs (HMRC) data shows nearly 65,000 warning letters were sent to suspected crypto tax under-payers in the 2024/25 financial year, more than double the number issued a year earlier.

Figures released under a Freedom of Information request by accountancy firm UHY Hacker Young reveal a sharp escalation in HMRC’s pursuit of unpaid crypto taxes.

Letters were sent to individuals suspected of failing to report gains made on trading, spending, or transferring cryptocurrencies.

The tax office has been increasing its use of exchange data and international cooperation to identify non-compliance.

From 2026, HMRC will automatically receive data from major global trading platforms under a new OECD Crypto-Assets Reporting Framework, giving it far greater visibility into investors’ activity.

Speaking to the Financial Times, Neela Chauhan, partner at accountancy firm UHY Hacker Young, said:

“The tax rules surrounding crypto are quite complex, and there’s now a volume of people who are trading in crypto and not understanding that even if they move from one coin to another it triggers capital gains tax.”

The Treasury has not announced any crypto-specific measures ahead of Reeves’ Budget, but officials have signalled that closing tax loopholes and tightening enforcement will be central themes.

The chancellor is already expected to close the low-value import exemption used by e-commerce platforms such as Shein and Temu.

In April, Reeves said the government was examining how small imported parcels are treated under U.K. customs rules, a review that follows similar action in the U.S.

Currently, parcels valued at £135 or less are exempt from customs duties, while items priced above that threshold can attract import charges of up to 25%.

Major British retailers, including Next and Sainsbury’s, have urged ministers to reform the system, arguing that it gives overseas sellers an unfair advantage.

A similar focus on under-reported areas of the economy, such as crypto trading, would align with that broader strategy.

As the Treasury ramps up tax enforcement, industry figures warn that the U.K. risks losing its competitive edge in digital assets.

Mohamed Ezeldin, Head of Tokenomics at blockchain investor Animoca Brands, said the U.S. is “in a much better position” to lead the next phase of crypto growth.

Speaking at the Zebu Live conference in London, Ezeldin told CCN that high taxes are undermining Britain’s ambitions to be a global tech hub.

“The U.K. says it wants to be a leader in emerging technologies, but realistically, no steps have been made to alleviate any of the pain points,” he said.

“A lot of founders are leaving the U.K., moving to Dubai, Lisbon, and other low-tax jurisdictions to build their businesses.”

Ezeldin added that frequent changes in government and a lack of regulatory clarity have weakened the U.K.’s crypto goals.

“The instability within the U.K. government right now is not a beacon of success,” he said.

His comments echo those of former chancellor George Osborne, who wrote in the Financial Times that Britain had “allowed itself to be left behind” in the global crypto boom.

Osborne warned that while the U.S. and other economies are accelerating regulation, the U.K. risks missing out on the next wave of innovation.

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