An accountancy firm in Ulverston is urging cryptocurrency investors to ensure they are paying the correct level of tax on their gains.

Mark Leadley, a taxation expert from JF Hornby & Co, made the plea as HMRC targets individuals it suspects of dodging their liabilities with 'nudge letters'.

He says many crypto investors are unaware of their tax obligations due to uncertainty over tax rules and a limited understanding of the nature of crypto assets.

Mr Leadley said: "Many investors might not realise that gains from crypto assets are liable for income tax or Capital Gains Tax (CGT), just like any other asset, depending on how they are held.

"If you receive a ‘nudge letter’ from HMRC, it’s essential to take it seriously. Even those who don’t get a letter should review their crypto activity and submit a tax return or use the real-time Capital Gains Tax service if needed."

He warned that tax may still be due even if the investor does not believe their investments have been profitable.

Selling, lending, or 'staking' crypto assets, or even just transferring them between crypto platforms or portfolios, will generally trigger a disposal in the relevant tax year.

According to the Chartered Institute of Taxation, a chargeable disposal occurs when an individual sells crypto assets for fiat currency, exchanges one crypto asset for another, uses crypto assets to buy goods or services, or gives away crypto assets to someone other than a spouse or civil partner.

Mr Leadley said: "This is a complex area to navigate, and we encourage all holders of crypto currencies to consider their trading patterns over the last 12 months in the context of the information above and take action where necessary.

“We can, of course, help with all tax-related matters and are here to support our existing and new clients in this area.”