Got an HMRC crypto 'nudge letter'? What it means and what to do

Plenty of UK crypto holders have opened the post lately to find a letter from HMRC about their cryptoassets. These are the ones people call “nudge letters”; HMRC's own name for them is “one to many”letters. It sends them to a group of people it thinks might owe tax, as a prompt to check and put things right before it opens a formal enquiry. Getting one doesn't mean you've done anything wrong, and it doesn't mean you're under investigation. It's also not something to shove in a drawer and forget.

Why it came to you

HMRC isn't guessing here. It already holds data, including information handed over by the crypto exchanges themselves, and it uses that to flag people who look like they've disposed of cryptoassets without declaring the gain. The campaign in August 2024 sent out around 65,000 of these letters on its own, more than double the year before, and the numbers keep climbing.

And “disposal” covers far more than most people expect. It isn't just cashing out to pounds. Selling, swapping one coin for another, spending crypto, or giving it away (to anyone other than your spouse or civil partner) all count, and any of them can create a taxable gain even if no real money ever reached your bank.

What not to do

• Don't ignore it.There's usually a date to reply by, and silence is the one thing most likely to turn a polite nudge into a formal enquiry, with bigger penalties and interest on top.
• Don't assume you owe. A lot of people who get these owe nothing at all. Losses, moving coins between your own wallets, and gains that sit under the annual allowance can all wipe out the bill. The letters go to people HMRC suspects, not only to people who definitely owe.
• Don't panic and guess a figure. A wrong disclosure can land you in as much trouble as no disclosure. Work the number out properly first.

The steps to take

Whether you end up owing or not, the route is the same: get to the real number, then act on it.

1. Work out your gains and losses for every tax year the letter mentions, the way HMRC wants it done: the Section 104 pool, with the same-day and 30-day rules, every disposal priced in pounds at the moment it happened.
2. Take off the annual exempt amount. For 2025/26 the first £3,000 of total gains is tax-free (it used to be more: £6,000 in 2023/24, and £12,300 in 2022/23 and before). Only what sits above the allowance gets taxed.
3. If you owe for an earlier year, HMRC's Cryptoassets Disclosure Service is the route to report it and pay, and the letter points you straight there. For the current year, it goes on the SA108 capital gains pages of your Self Assessment.
4. If it turns out you owe nothing, you still have to reply. Tell HMRC why (net losses, only transfers between your own wallets, gains inside the allowance, whatever your reason is) and keep the workings that back it up.

The hard part, and how to make it stick

The figure HMRC is after is every disposal's gain or loss, matched under the pooling rules, often across years of trades and more than one exchange. By hand or in a spreadsheet, this is exactly where people come unstuck, and a wrong number on a disclosure is the very thing that brings on the penalties the letter warns about.

That's the job CryptoCGTdoes. You upload your transaction history (a CSV export from any exchange), and it works the gains out under HMRC's Section 104 rules, gives you the SA108 figures, and hands you a dated, locked copy of the computation you can keep as proof of how every number was reached. Each figure traces back to the trade behind it, and it reproduces HMRC's own worked examples down to the penny. One flat fee, no subscription. Always check the numbers against your own records before you file or disclose.

Not even sure crypto tax applies to your situation? Start with how UK crypto tax works. This is general information rather than tax advice, and if your history is large or messy it's worth talking to a qualified adviser before you reply.

Sources

• GOV.UK: Implementation of the Cryptoasset Reporting Framework (CARF)
• GOV.UK: Tell HMRC about unpaid tax on cryptoassets (Cryptoassets Disclosure Service)
• Chartered Institute of Taxation: HMRC “one to many” letter on cryptoasset disposals
• HMRC: Cryptoassets Manual