Key Takeaways
- Average settlement rose from £12,654 in 2024/25 to £21,553 in 2025/26, indicating HMRC is pursuing larger undisclosed gains
- CARF reporting began in January 2026 across 50-plus countries; the first cross-border data exchange arrives in May 2027, covering all 2026 transactions
- Unprompted voluntary disclosure carries lower penalties than a prompted investigation; the window before HMRC contacts you first is narrowing
HM Revenue and Customs (HMRC) recovered £8,328,132 from 502 crypto investors across the two tax years ending April 2026, according to data obtained through a freedom of information request submitted by compliance provider Identomat and reported by the Financial Times. The raw numbers break down as follows: 280 settlements totaling £3,543,387 in 2024/25, and 222 settlements totaling £4,784,745 in 2025/26.
The declining headcount paired with rising total value is the detail that matters most. Average settlement size grew from approximately £12,654 per investor in 2024/25 to approximately £21,553 in 2025/26, a 70% increase in a single year.
HMRC is recovering larger amounts from fewer people, which suggests its compliance targeting is becoming more precise rather than broader, identifying investors with more significant undisclosed positions rather than sweeping up large numbers of small underpayments.
HMRC confirmed that the settlement figures do not reflect the full scope of its enforcement activity, which also includes formal tax inquiries, data analysis, and targeted compliance campaigns operating outside the voluntary disclosure facility.
Infrastructure Change That Makes Past Behavior Visible
The settlement data covers activity conducted before HMRC’s enforcement capabilities dramatically expanded. On January 1, 2026, the Cryptoasset Reporting Framework (CARF) became mandatory for UK-based crypto exchanges and digital asset platforms.
Under CARF, every platform must collect each UK customer’s name, address, date of birth, tax residency, National Insurance number, and a comprehensive summary of their crypto transactions, then report all of it directly to HMRC.
CARF operates across more than 40 countries simultaneously. Overseas exchanges serving UK residents face the same reporting obligations as domestic platforms. The first reports covering 2026 transactions must be submitted to HMRC by May 31, 2027. Cross-border data sharing between participating tax authorities begins in 2027.
The practical implication is specific. Any UK investor who traded on Binance, Coinbase, Kraken, or any other platform operating in a CARF-participating country during 2026 will have that activity reported to HMRC, regardless of whether they used an overseas exchange precisely to avoid domestic scrutiny. The assumption that offshore platforms provided a reporting gap no longer holds.
Nudge Letter Escalation and What It Signals
HMRC sent approximately 65,000 nudge letters to crypto investors for the 2024/25 tax year, more than double the 27,700 sent in 2023, according to data obtained through a separate freedom of information request. Nudge letters are targeted warnings sent to individuals HMRC suspects of owing unpaid capital gains tax, based on data already held by the authority through exchange reporting, bank data, and other sources.
The increase from 27,700 to 65,000 letters in a single year reflects both improved data-matching capabilities and a deliberate enforcement escalation.
Recipients who receive a nudge letter and fail to respond face a prompted disclosure process, which carries materially higher penalties than an unprompted voluntary disclosure made before HMRC makes contact.
What Undisclosed Gains Actually Look Like Under Current Rules
Capital gains tax applies when a UK investor disposes of a cryptoasset, including selling for fiat, swapping one token for another, spending crypto on goods or services, or gifting crypto to anyone other than a spouse or civil partner.
The annual capital gains tax exemption currently stands at £3,000, reduced from £12,300 in 2022/23. Staking rewards, DeFi lending returns, yield farming income, and liquidity pool proceeds are treated as income rather than capital gains and taxed at the investor’s marginal income tax rate.
Many undisclosed positions arise not from deliberate evasion but from misunderstanding. Swapping Bitcoin for Ethereum is a disposal. Receiving staking rewards is income. Using USDC to pay for an NFT is a disposal of USDC. Each of those events creates a tax obligation that the investor may not have identified or reported.
HMRC has acknowledged this in the design of its disclosure facility, which exists specifically because the tax authority recognizes that many non-compliant investors did not understand their obligations, rather than deliberately concealing them.
Should Undisclosed Gains Worry You and What To Do About It
The short answer is yes, significantly more than they should have worried you before January 2026. Voluntary disclosure through HMRC’s online crypto disclosure portal remains available and carries lower penalties than an HMRC-initiated investigation.
Acting before receiving a nudge letter qualifies as an unprompted disclosure. Acting after receiving one does not. The difference in penalty rates is material, and in some cases, the difference between a financial settlement and a criminal referral.
From 2027 onward, HMRC will receive structured transaction data covering the entire 2026 calendar year from every platform operating under CARF. Investors with undisclosed gains from that year will not be able to argue that limited data was available.
The data will exist, it will have been reported, and HMRC will be working through it. The £8.3 million recovered from 502 investors across two years is not a measure of HMRC’s ambition. It is a measure of what voluntary disclosure produced before the authority’s data infrastructure reached full operational capacity.
Top Trending Crypto Articles
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.
Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.
