Extra tax collected by HMRC from capital gains tax investigations surged 46% to £266m last year, up from £182m the previous year, as the tax authority intensified efforts to clamp down on avoidance and under-reporting.

The number of CGT cases closed rose 26% to 9,800 from 7,800, with the average underpaid tax per investigation climbing to £27,142 from £23,333. HMRC has targeted cryptocurrency investors, amateur day traders, and individuals using family asset transfers for tax planning, according to Lubbock Fine, the accountancy firm.

“Families are increasingly finding that passing on wealth is no longer a straightforward exercise,” said Graham Caddock, a partner at Lubbock Fine. “HMRC is scrutinising these transactions far more aggressively, not just for unpaid tax but it is increasingly challenging how assets are valued in the first place.”

Transfers of shares or other assets to family members can trigger a capital gain for the transferor. HMRC suspects many individuals deliberately undervalue disposals or fail to declare them fully to minimise liabilities. The drive comes as inheritance tax planning around business assets grows more common, prompting closer examination of related capital gains implications.

Taxman is focusing on cryptocurrency trades

Cryptocurrency has emerged as a particular flashpoint. The rapid rise of retail crypto investing has created a new focus area for investigators. Many younger investors remain unaware that profits are taxable, while some perceive digital assets as operating outside conventional rules.

“Cryptocurrencies were renowned for being the ‘wild west’ of investing,” Caddock added. “For many crypto investors this categorisation has stuck and many underestimate how seriously HMRC treats undeclared gains. Even worse, some crypto investors think that gains made through digital assets somehow sit outside the normal tax rules, which is exactly why HMRC is targeting the sector so aggressively.”

The authority has expanded its Cryptoassets Disclosure Facility to identify non-compliant holders, with significant penalties and interest for those who fail to come forward. Day traders buying and selling shares have also come under scrutiny, particularly younger participants making substantial gains for the first time.

Changes to Business Property Relief

Upcoming changes to Business Property Relief are expected to fuel further activity. HMRC is likely to challenge transfers of business assets below market value designed to reduce CGT and inheritance tax exposure. Accurate valuations and proper disclosure will be critical, with mistakes more likely to trigger investigations and penalties.

The figures reflect a broader toughening of HMRC’s approach to high-net-worth individuals and complex planning structures. With public finances under pressure, the authority is deploying data analytics and third-party information, including from exchanges and platforms, to spot discrepancies.

Lubbock Fine advises clients to maintain robust records and seek professional advice on valuations and disclosures. “Anyone disposing of assets or carrying out inheritance tax planning needs to ensure valuations are accurate and gains are properly disclosed,” Caddock warned. “Mistakes or omissions that may once have gone unnoticed are now far more likely to result in an investigation by HMRC and potentially significant penalties.”

The surge in recovered tax underscores the growing compliance burden on investors navigating volatile markets and evolving reliefs.

For HMRC, the strategy appears to be paying dividends, with higher case volumes and larger yields per investigation signalling improved detection and enforcement capabilities. As crypto and family wealth transfers remain in focus, the pressure on taxpayers is unlikely to ease.