Will we see HMRC Crypto Nudge Letters in 2022?
Will HMRC be issuing nudge letters again this year and three things you should do before you receive one?
Mon Oct 03 2022
Last year in November we saw HMRC send out "Nudge Letters" to thousands of crypto investors in the UK utilising data they received from exchanges. These letters are designed to encourage crypto investors to check their tax situation and file a return if they need to. You can see a copy of the 2021 letter here!
Will we see more nudge letters in 2022? Possibly... we've had no official word from HMRC (yet), but we wouldn't be surprised if they make a reappearance this year ahead of the filing deadline in January.
Here are three things you can do now to ensure you are ready:
1. Check if you need to file
Depending on your circumstances, you may need to file a self-assessment return with HMRC - if you already file a return then you'll need to include figures for your crypto trading gains/losses. If you don't currently file a self-assessment then you'll only need to submit a return if your gains/losses are more than the annual exemption for the year (£12,300) or if your disposal proceeds are more than £49,200 for 2021/22.
Remember to check previous years too, as it's possible that you've forgotten to file when you perhaps should have. Remember, if it's your first time filing, it can take up to 21 days to complete registration so don't leave it too late.
2. Don't ignore the letter
Although it might be tempting to ignore the letter and forget all about it, that's probably the worst thing you can do. You might need to re-file or file for the first time to make sure you've reported your activity accurately. Remember HMRC can opt to conduct a compliance check on your tax affairs, requesting additional information from you to check you've paid the correct amount of tax.
3. Get ahead of the letters
If you've been trading crypto then it's a good idea to check if you need to file. A simple way to check is to use a crypto tax calculator like Recap. Crypto tax calculators make it simple to know if you need to file by crunching the numbers for you. We take a privacy-first approach, ensuring we never see any of your trading or transaction history and you only pay if you need to file.
Need some help? Reach out to us
Crypto taxes can be complicated, especially if you've been involved with DeFi, lending or staking. Our team is always here to help, we can't provide tax advice but we know plenty of crypto savvy accountants that would be happy to help. Just contact us for a chat.
We've also put together a comprehensive crypto tax guide for the UK with detailed information about every type of trading. You can read more here.
This article is intended as an informative piece. This is not accounting or tax advice.