The capital gains tax threshold for the current tax year, which began on 6 April, is £3,000. For the 2023-24 tax year, it was £6,000, and for 2022-23 it was £12,300.

In some cases, owners of cryptocurrency may also be liable to pay income tax and National Insurance on their gains. This applies in cases where their cryptoassets have generated an income. 

For example, some cryptocurrencies enable investors to “stake” their assets. This means they forfeit access to them for a certain period of time in exchange for interest, not dissimilar to a fixed-rate savings account. This is regarded as income by HMRC, and taxed as such.

‘The worst thing crypto owners can do is ignore this letter’

While tax non-compliance is common among cryptocurrency investors, it can have serious consequences, as Paul Falvey, a partner at tax firm BDO, warned.

Mr Falvey said: “Many owners of cryptoassets may not be fully aware of their obligations and may not have filed a tax return before. They could well get a shock when this letter hits the doormat – but the worst thing they could do is to ignore it.