What to do if you receive an HMRC letter about crypto tax

Why HMRC has written to you about your crypto holdings

HMRC obtains information from UK and overseas crypto exchanges that can reveal when users dispose of or receive digital assets. If this data suggests that you have made disposals that were not reported, HMRC will contact you directly.

You can make a disposal without ever converting your crypto back into pounds. Selling crypto, exchanging one token for another, or using crypto to buy goods or services can all create a taxable event.

What HMRC means by a disposal

You may have made a disposal if you:

• Sold crypto assets for traditional currency
• Exchanged one crypto asset for another
• Used crypto to pay for goods or services
• Gave crypto to someone other than your spouse or civil partner

Each of these is treated as if you had sold the asset, and any profit made may be subject to Capital Gains Tax.

When crypto is treated as income

Some crypto activities are taxed as income rather than capital gains. This includes mining, staking, lending or receiving crypto through employment. In these situations, Income Tax and National Insurance contributions may apply.

The distinction between income and capital gains is not always straightforward. HMRC’s guidance notes that crypto taxation can be complex, and professional advice is recommended if you are uncertain.

What HMRC expects you to do next

If you receive a letter about under-reporting of crypto assets, HMRC expects you to:

• Review your crypto transactions to check that everything has been correctly reported
• Amend your Self Assessment tax return if you are still within the time limit for the relevant year
• Use HMRC’s crypto asset disclosure service to declare any unpaid tax from previous years
• Provide supporting information if you are confident that no additional tax is due

The letter gives you 60 days to take action. It is important to respond within this timeframe to avoid penalties or interest charges.

Why you should respond quickly

If you do not act, HMRC may issue an assessment for unpaid tax and apply penalties. Engaging early and providing clear information helps resolve matters more efficiently and shows you are acting in good faith.

Even if you believe your tax reporting is accurate, it is worth double-checking. Many people are unaware that exchanging one token for another or using crypto to pay for something can count as a taxable disposal.

How Gravita can help

HMRC’s focus on crypto assets is increasing as digital assets become more mainstream. The rules are evolving, and many taxpayers make errors unintentionally.

Our team at Gravita specialises in helping clients in the digital assets sector understand their reporting requirements and engage with HMRC effectively.

If you have received a letter about under-reporting of crypto assets or would like to review your position, contact Gravita for professional support and clear, practical guidance.