Key facts
- Each type of cryptocurrency token is a separate asset for CGT purposes, with its own pooled cost.
- A “disposal” includes selling crypto for fiat, exchanging one crypto for another, and using crypto to pay for goods or services.
- Crypto uses the same share matching rules as shares: same-day, 30-day, and pooled average cost.
- The Annual Exempt Amount of £3,000 (2025/26) applies — gains below this threshold are tax-free.
- Mining and staking rewards may be taxed as income rather than capital gains.
How HMRC Treats Cryptocurrency
HMRC does not treat cryptocurrency as money or currency. Instead, cryptoassets (including Bitcoin, Ethereum, stablecoins, utility tokens, and NFTs) are classified as property. This means they are subject to CGT when disposed of at a gain, in the same way as shares or other investments.[1]
Each type of token is a separate asset. For example, your Bitcoin holding has its own cost pool, separate from your Ethereum holding. The share matching rules (same-day, 30-day, and pooled average cost) apply to each token type individually.[3]
Key point: Simply holding cryptocurrency is not a taxable event. CGT is only triggered when you make a disposal. However, the definition of “disposal” for crypto is broader than many people realise.
What Counts as a Crypto Disposal?
You make a disposal for CGT purposes when you:[2]
- Sell cryptocurrency for fiat currency (e.g. selling Bitcoin for pounds sterling)
- Exchange one cryptocurrency for another (e.g. swapping ETH for BTC)
- Use cryptocurrency to pay for goods or services
- Give away cryptocurrency to another person (market value is used as proceeds)
- Donate cryptocurrency to charity (but gift aid relief may apply)
The following are not disposals:
- Transferring crypto between your own wallets or exchanges
- Buying cryptocurrency with fiat currency
- Receiving an airdrop (though this may be taxable as income)
Pooling Rules for Crypto
HMRC applies the same share identification rules to cryptocurrency as to shares. Each token type has its own pool. When you dispose of tokens, they are matched in this order:[3]
- Same-day rule: Tokens disposed of are first matched with tokens of the same type acquired on the same day
- 30-day rule: Next, matched with tokens acquired within the following 30 days
- Pooled average cost: Remaining tokens are matched against the average cost pool (equivalent to the section 104 pool for shares)
Worked Example: Crypto Pool Calculation
Alex builds up a Bitcoin holding over time:
| Date | Transaction | BTC | Price/BTC | Cost | Pool BTC | Pool Cost |
|---|---|---|---|---|---|---|
| Jan 2023 | Buy | 0.5 | £16,000 | £8,000 | 0.5 | £8,000 |
| Jul 2024 | Buy | 0.3 | £50,000 | £15,000 | 0.8 | £23,000 |
| Feb 2025 | Buy | 0.2 | £70,000 | £14,000 | 1.0 | £37,000 |
In November 2025, Alex sells 0.4 BTC at £80,000 per BTC (£32,000 proceeds). He does not buy any Bitcoin on the same day or within 30 days:
| Item | Amount |
|---|---|
| Sale proceeds (0.4 × £80,000) | £32,000 |
| Less: pool cost (0.4 ÷ 1.0 × £37,000) | −£14,800 |
| Gain | £17,200 |
| Less: Annual Exempt Amount | −£3,000 |
| Taxable gain | £14,200 |
Crypto-to-Crypto Exchanges
A common misconception is that swapping one cryptocurrency for another is not taxable because you have not received “real money.” In fact, each exchange is two disposals from HMRC’s perspective:[1]
- A disposal of the token you gave up (the proceeds are the sterling market value at the time of the swap)
- An acquisition of the new token (at the same sterling market value)
Example: ETH to BTC Swap
Beth swaps 5 ETH for 0.1 BTC. At the time of the swap, 1 ETH is worth £2,500. Beth’s pooled cost for those 5 ETH is £8,000.
| Item | Amount |
|---|---|
| Deemed proceeds (5 × £2,500) | £12,500 |
| Less: pool cost of 5 ETH | −£8,000 |
| Gain on ETH disposal | £4,500 |
The 0.1 BTC acquired enters Beth’s Bitcoin pool at a cost of £12,500.
Mining, Staking & DeFi
The tax treatment of crypto received through mining, staking, and decentralised finance (DeFi) depends on the nature of the activity:[1]
| Activity | Income Tax Treatment | CGT Treatment |
|---|---|---|
| Mining (trading) | Tokens are trading income at market value when received | Later disposal: CGT on gain above income value |
| Mining (not trading) | Miscellaneous income at market value when received | Later disposal: CGT on gain above income value |
| Staking rewards | Typically miscellaneous income at market value when received | Later disposal: CGT on gain above income value |
| DeFi lending interest | Typically miscellaneous income or savings income | Later disposal: CGT on gain above income value |
| Liquidity provision | Complex — may involve disposals when tokens are deposited | Depends on the specific DeFi protocol mechanics |
Tip: When you receive tokens through mining or staking, the market value at the time of receipt becomes the base cost in your CGT pool. You should record the sterling value on the date received, as you will need this when you later dispose of those tokens.
Non-Fungible Tokens (NFTs)
HMRC treats NFTs as cryptoassets. However, because each NFT is unique (non-fungible), the pooling rules do not apply in the same way. Each NFT is treated as a separate, identifiable asset. When you sell an NFT, the gain is simply the sale proceeds minus the cost of acquisition (including any gas fees or marketplace fees).[1]
If you create an NFT (mint it), any profit from selling it may be treated as trading income rather than a capital gain, depending on the circumstances.
Reporting Crypto Gains
Crypto gains are reported on the SA108 (Capital Gains Summary) pages of your Self Assessment tax return. Unlike UK property disposals, there is no requirement to report within 60 days.[2]
You must report if:
- Your total capital gains exceed £3,000 (the AEA for 2025/26)
- Your total disposal proceeds from all assets exceed £12,000 (four times the AEA)
The filing deadline for 2025/26 is 31 January 2027 (online), and any CGT due must be paid by the same date.
Record keeping: Maintain detailed records of every crypto transaction, including dates, token types, quantities, sterling values, exchange rates, wallet addresses, and transaction hashes. HMRC may request these records and can look back up to 20 years in cases of deliberate non-compliance.
Frequently Asked Questions
Do I pay tax when I swap one cryptocurrency for another?
Yes. Exchanging one cryptocurrency for another (e.g. Bitcoin to Ethereum) is a disposal for CGT purposes. You must calculate the gain or loss based on the sterling market value of the crypto you disposed of at the time of the exchange.
How does HMRC know about my crypto?
HMRC receives data from UK and overseas crypto exchanges under information-sharing agreements. From January 2026, the OECD’s Crypto-Asset Reporting Framework (CARF) requires exchanges to report user transactions to tax authorities. HMRC has also used “nudge letters” to prompt taxpayers to check their crypto tax obligations.
Is crypto mining taxable?
It depends on whether the mining amounts to a trade. If it does, the tokens received are taxed as trading income. If it is not a trade (e.g. occasional hobby mining), the tokens are treated as miscellaneous income. In either case, when you later dispose of the mined tokens, CGT applies based on the market value at the time they were received.
Do I need to report crypto on my tax return?
Yes, if your total capital gains exceed £3,000 or your total disposal proceeds exceed £12,000 in the tax year. You report crypto gains on the SA108 (Capital Gains Summary) pages of your Self Assessment return.
Further Reading
- Share Matching & Section 104 Pools — detailed explanation of the same-day, 30-day, and pooling rules
- CGT on Shares — similar rules apply to listed shares and funds
- Annual Exempt Amount — your £3,000 tax-free threshold explained
- Capital Losses: How to Use Them — offsetting crypto losses against other gains
- CGT Rates (2025/26) — full rate tables for all asset types
Looking for simple tax software?
#GoFile is HMRC-recognised and trusted by 50,000+ UK businesses. Set up in minutes, file with confidence.
Get Started For FreeNo credit card required · Cancel anytime