Can HMRC Take Your Crypto for Unpaid Tax? What's Law, What's Proposed and Where Private Keys Fit

HMRC can't currently reach into your crypto wallet and take coins to settle an ordinary tax bill. Its direct recovery powers cover bank and building society accounts, not crypto. It can still sue for unpaid tax, and crypto can be seized in criminal cases. What's changing in 2026 is information: HMRC wants wider powers to demand records from crypto firms, and the industry wants private keys kept off the list.

There's a lot of heat online about HMRC "coming for" people's crypto. Some of it is fair worry about where things are heading. Some of it mixes up three separate things: getting information, collecting debts and seizing criminal property. They work very differently, so it's worth pulling them apart.

Can HMRC take crypto directly from my wallet today?

Not for a normal tax debt. HMRC's Direct Recovery of Debts power, in force since 2015, lets it take money from bank and building society accounts, with safeguards. It doesn't extend to crypto wallets or exchange accounts. To collect from your crypto, HMRC would generally need to go through the courts like any other creditor.

The bank power itself was hedged with conditions when it was introduced. Reporting at the time said HMRC would only use it for debts of at least £1,000, must leave at least £5,000 across your accounts, and committed to a face-to-face visit before acting. Those figures come from 2014–15 coverage, so treat them as the original design rather than today's exact wording.

Back in April 2023, HMRC floated extending direct recovery to "digital wallets" in a call for evidence on collecting debts from non-paying businesses. BDO reported at the time that it was one of four ideas, aimed at businesses and accounts such as PayPal. It never became law, and the notice didn't spell out whether crypto was included.

Photo: Rept0n1x, CC BY-SA 3.0, via Wikimedia Commons

What new powers is HMRC proposing in 2026?

Two separate packages. On 13 July 2026 HMRC published draft legislation to widen its civil information powers, including bringing crypto firms within Financial Institution Notices. And a June 2026 consultation, Tackling lower value tax debts, proposed taking monthly instalments from bank accounts of persistent non-payers. Neither proposes seizing crypto.

Proposal	What it would do	Status (20 October 2026)
Information and inspection powers reform	Extend Financial Institution Notices to crypto service providers; widen identification notices; update digital records rules	Technical consultation closed 7 September; due in Finance Bill 2026-27
Tackling lower value tax debts	Monthly deductions from UK bank and building society accounts for persistent non-payers	Consultation closed 28 August
Direct recovery from digital wallets	Floated for business wallets	2023 idea, not taken forward into law

The information measure is the one with a crypto angle. A Financial Institution Notice lets HMRC require a firm to hand over information about a customer, approved by an authorised officer rather than a tribunal. HMRC's policy paper says the changes would "bring into scope businesses that provide services relating to cryptoassets" and estimates the number affected is "in the 100s." It also says the reforms "do not create a new standalone information power" and that information must be "reasonably required to check a tax position."

On the debt side, BDO said HMRC estimates the bank-deduction plan could cover debts up to £5,000 for individuals and £10,000 for businesses, potentially affecting 4.8 million taxpayers owing around £4 billion. BDO called for a full right of appeal before any such power goes live.

Why does the crypto industry want private keys protected?

Because a private key isn't just information about your crypto. It is control of it. Anyone holding your key can move the coins. CryptoUK, the UK trade body, asked HMRC on 11 September for "an express exclusion for private keys and other controlling credentials" in the new information powers.

HMRC's policy paper doesn't mention private keys, seed phrases or wallets at all. That's the problem as the industry sees it. A power to demand "records" from a crypto business is broad, and without an explicit carve-out nobody can say for certain where the line falls. CryptoUK went further and asked the government to "withdraw or defer the measure pending clearer boundaries and safeguards", while backing narrower, targeted powers for compliance checks.

My take: the ask is reasonable and cheap to grant. HMRC says it isn't creating a new power, so writing "this doesn't cover keys" into the law shouldn't cost it anything. Until it does, the anxiety will keep circulating.

When can authorities actually seize crypto?

Mostly in criminal and proceeds-of-crime cases. Since 26 April 2024 the Economic Crime and Corporate Transparency Act has given UK enforcement agencies specific powers to seize, freeze and recover cryptoassets, including civil forfeiture without a conviction. Courts can also make confiscation orders after a conviction.

HMRC has used seizure in criminal tax investigations. In 2022 it was reported to have seized three NFTs from suspects in a VAT fraud inquiry, its first crypto seizure. That's a world away from an unpaid Self Assessment bill. For ordinary debts, HMRC's realistic route remains county court proceedings, after which a creditor can apply for enforcement against assets, including potentially crypto held on a UK exchange.

The CPS guidance on confiscation is clear that orders are valued in pounds and enforced through HM Courts and Tribunals Service. The recent case of a former NCA officer shows how that works with bitcoin in practice.

What safeguards protect me?

Today, quite a few. HMRC must usually go through a court to enforce a debt against non-bank assets, information notices must be "reasonably required", third-party notices generally need tribunal approval, and the bank deduction plans are still proposals. Paying or agreeing a Time to Pay arrangement stops most enforcement.

The bigger practical point? HMRC already sees a lot. The Cryptoasset Reporting Framework has required UK platforms to collect customer tax details since January 2026. If you owe tax on crypto, the sensible move is to sort it before any of these powers matter.

Frequently asked questions

Can HMRC take my bitcoin for unpaid tax? Not directly at the moment. HMRC's direct recovery power covers bank and building society accounts only. It can take court action for unpaid tax, and crypto can be seized in criminal cases, but there's no current power to take coins straight from your wallet.

Can HMRC make me hand over my private keys? HMRC's July 2026 policy paper on information powers doesn't mention private keys. CryptoUK has asked for an explicit exclusion for keys and other controlling credentials. Until the final law is published, whether that exclusion appears is unknown.

Is HMRC's crypto information power law yet? No. It's draft legislation published on 13 July 2026, with a technical consultation that closed on 7 September 2026. HMRC says it will take effect from Royal Assent to Finance Bill 2026-27.

Will HMRC take money from my bank account for small debts? It has proposed that. The Tackling lower value tax debts consultation, which closed on 28 August 2026, suggested monthly deductions for people who repeatedly ignore HMRC, after a formal warning notice. It isn't law yet.

What to do now

If you owe tax on crypto, contact HMRC before it contacts you: our voluntary disclosure guide explains how. To understand what data HMRC already receives, read can HMRC see my crypto? and our CARF explainer. And keep your keys to yourself. This isn't tax advice.