Crypto Tax In The UK: How HMRC Treats Cryptoassets
Cryptoassets include exchange tokens like Bitcoin and Ethereum, as well as NFTs and similar digital assets. The HMRC Cryptoassets Manual outlines that these assets are not considered currency or money in the UK.
How they are taxed depends on user activity. If you are investing with the intention to make a profit, you will typically be liable for Capital Gains Tax (CGT). If you receive crypto through mining, staking, airdrops, or as employment income, Income Tax may apply instead.
The UK tax year runs from 6 April to 5 April. All crypto transaction values must be converted to GBP at the time of the transaction, using the fair market value.
Key Notes
Cryptoassets in the UK are subject to either Capital Gains Tax or Income Tax depending on whether they are bought, sold, swapped, received as rewards, or earned as income.
Disposals such as selling, swapping, or spending crypto generally trigger Capital Gains Tax events, with specific rules like same-day and 30-day matching and an annual tax-free allowance of £3,000 for 2024/25.
Income from mining, staking, airdrops, or employment is taxable under Income Tax, and clear GBP valuations and meticulous record-keeping are required to comply with HMRC rules.
Common pitfalls for UK crypto investors include misreporting swaps, omitting qualifying fees, misunderstanding allowable losses, and missing mandatory reporting thresholds, making strong records and up-to-date compliance critical.
When Do You Pay Capital Gains Tax On Crypto?
What counts as a disposal for CGT
Disposals occur when you sell crypto for GBP or other fiat currencies, swap one crypto for another (including crypto-to-crypto swaps), or spend crypto on goods and services. Gifting crypto (unless to a spouse/civil partner) is also a disposal.
Gifts to charities may attract relief. However, transferring crypto between your own wallets does not trigger CGT. HMRC guidance is clear: every disposal is a potential taxable event for UK tax purposes.
Annual exempt amount and rates
Each UK tax year, investors benefit from an Annual Exempt Amount – £3,000 for 2024/25 (check HMRC for updates). Gains above this allowance are taxed at CGT rates: 10% for the basic rate band and 20% for higher and additional rate taxpayers.
Tax bands interact with your overall income for the year, determining your final CGT rate.
Reporting thresholds and deadlines
UK crypto investors report gains via Self Assessment. The deadline for reporting and paying is 31 January following the tax year.
Report gains even if under the CGT allowance, if your total disposals exceed four times the allowance (e.g., £12,000 if the allowance is £3,000).
Save GBP valuations, fees, and all calculation evidence for HMRC review.
The share matching rules that apply to crypto
The same-day and 30-day rules (bed & breakfasting) apply when disposing of crypto. These rules dictate how costs and disposals are matched, together with section 104 pooling, for calculating each gain or loss.
This is critical for active traders or those frequently rebalancing portfolios.
Read also: Reporting Cryptocurrency On Your Taxes: A How-To Guide
How To Calculate Your Crypto Capital Gains Step By Step
First, identify all crypto disposal events in the UK tax year. Use HMRC rules to match acquisitions and disposals—applying same-day, 30-day, and section 104 pooling as needed.
Convert sale proceeds and allowable costs to GBP at the transaction date using fair market value. Allowable costs include the purchase price, exchange or network fees, and directly related professional expenses.
Subtract the Annual Exempt Amount to determine the taxable portion.
Worked Example:
You swap 1 ETH (acquired for £1,000 + £10 fee) for 0.03 BTC when it is worth £1,300.
Gain: £1,300 (proceeds) − £1,010 (cost + fee) = £290.
Subtract part of your CGT allowance to determine tax.
Income Tax On Crypto: When It Applies Instead Of CGT
Mining and staking rewards are normally treated as miscellaneous income or, if trading as a business, trading income. Later disposals of these assets attract CGT, with the GBP value on receipt forming the base cost.
Airdrops are Income Tax if received as a reward or for a service; otherwise, consider CGT on disposal.
Referral rewards, yield, and employment income received in crypto usually trigger Income Tax and sometimes National Insurance (NIC).
Document GBP value at the point of receipt for each scenario.
When You Purchase Crypto Assets, What Are Your Potential Losses?
Purchasing crypto assets exposes you to market risk—prices can fall below your acquisition cost, creating a potential loss upon disposal and potential CGT loss relief.
Transaction costs and slippage reduce effective proceeds; fees may count as allowable costs for CGT calculations.
There are additional risks: protocol/platform failure (like exchange collapse), security hacks, phishing, wallet compromise, and loss of seed phrase. Authorised transfers to scammers (scam/rug pull) are usually disposals with nil or low proceeds—these losses may be claimable.
Pure theft or lost keys are not normally deemed disposals for CGT, but negligible value claims can help crystallise losses if assets are still in your control and now worthless.
Always document events and seek professional advice for complex cases.
NFTs And DeFi: Special UK Tax Considerations
NFT disposals usually attract Capital Gains Tax under current HMRC guidance. If you received NFTs as rewards or performed services, Income Tax may apply. Marketplace fees can be included as allowable costs for CGT.
DeFi activity—especially lending, borrowing, or staking returns—can be complex. Whether a transaction is a disposal depends on beneficial ownership and the platform’s specific terms. Staking rewards may be taxed as income.
HMRC’s cryptoasset guidance is evolving: always consult the HMRC Cryptoassets Manual before submitting your return.
Record-Keeping And Tools To Stay Compliant
Keep records of all crypto activity: transaction dates/times, asset types, quantities, GBP values, counterparties, wallet addresses, transaction hashes, and all related fees.
Store records for at least five years after the 31 January deadline for that tax year.
Use crypto tax software and APIs to match exchange and blockchain records and generate SA108 figures for your Self Assessment.
Common Mistakes And HMRC Red Flags To Avoid
Many UK investors mistakenly treat crypto-to-crypto swaps as non-taxable, ignore the 30-day matching rule, or use non-GBP prices without correct conversion.
Do not claim losses for stolen assets or lost keys unless you have a valid negligible value claim.
Do not omit exchange or network fees, or use the wrong rates.
Even if total gains are under the CGT allowance, you must report if disposal proceeds exceed four times the allowance.
FAQs: Quick Answers For UK Investors
Moving coins between your own wallets is not a taxable event.
Gifts to a spouse/civil partner are tax-free.
You do not pay VAT on crypto trades as investments.
Stablecoin trades are taxed like any other crypto.
You may need to register for Self Assessment if you have disposals or gains/losses to report.
Crypto capital losses can be offset against other capital gains.
Summary And Next Steps
UK crypto tax hinges on whether your crypto activity gives rise to Capital Gains Tax or Income Tax. Key triggers include sales, swaps, spending, or gifts. Deadlines are strict, with the 31 January Self Assessment cut-off.
Keep strong records. Check the latest HMRC Cryptoassets Manual for updates and accurate figures.
Disclaimer: This guide is for general information only and does not constitute tax, legal, or accounting advice. Seek professional advice for complex cases or high-value portfolios before filing your UK crypto tax return.
Final Thoughts
Understanding crypto tax in the UK is crucial for all investors. Whether it’s Capital Gains Tax or Income Tax, HMRC expects careful records and full compliance. Staying informed on evolving UK crypto regulations and seeking professional tax guidance for complex cases is essential.
At ICONOMI, we take compliance seriously. Our user-friendly platform is designed for transparent, secure, and compliant crypto asset management.
With ICONOMI’s innovative copy trading service, you can diversify your crypto portfolio easily, all while maintaining high compliance standards. Trust ICONOMI to help you navigate the crypto investment landscape with confidence—making your entry into digital assets both simple and responsible.
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