Cryptocurrency & Tax

How HMRC Views Crypto

HMRC does not consider cryptocurrency to be currency or money. Instead, it’s treated as property (a “cryptoasset”). This means the same tax rules that apply to selling shares or property apply to crypto.^[1]

Capital Gains Tax on Crypto

You may owe Capital Gains Tax when you “dispose” of cryptocurrency. A disposal includes:^[1]

Selling crypto for pounds or any other currency
Swapping one cryptocurrency for another (e.g. Bitcoin to Ethereum)
Spending crypto to buy goods or services
Giving crypto away (unless to your spouse or civil partner)

The gain is the difference between what you paid for the crypto (your “cost basis”) and what it was worth when you disposed of it.

Income Tax on Crypto

Some crypto activities are taxed as income rather than capital gains:^[2]

Mining — crypto received from mining is taxable income
Staking rewards — tokens earned from staking are income
Airdrops — if received in return for a service, it’s income
Employment paid in crypto — taxed as employment income at market value
DeFi lending income — interest earned from lending crypto

CGT Annual Exempt Amount

You can make gains of up to £3,000 per year (from 2024/25) across all assets before CGT applies. This covers your total gains, not just crypto.^[3]

CGT rates on crypto gains are 10% (basic rate) or 20% (higher/additional rate).

Record Keeping

HMRC expects you to keep detailed records of all crypto transactions:^[1]

Date of each transaction
Type of cryptoasset
Number of units bought/sold/swapped
Value in pounds sterling at the time
Transaction fees
Wallet addresses (for your own records)

Tip: Use crypto tax tracking software to generate reports. With potentially hundreds of transactions across multiple exchanges, manual tracking is extremely error-prone.

Reporting Crypto

Report capital gains from crypto on the SA108 (capital gains summary) supplementary pages of your Self Assessment return. Alternatively, you can use HMRC’s real-time CGT reporting service.^[4]

Crypto income (mining, staking, airdrops) should be reported as self-employment income on SA103 if it constitutes a trade, or as miscellaneous income. Either way, it goes on your Self Assessment return, which you can file online with GoFile.

Common Mistakes

Thinking crypto is anonymous — HMRC receives data from exchanges and uses blockchain analysis
Not reporting swaps — swapping one crypto for another is a taxable disposal
Forgetting about DeFi — staking, lending, and liquidity pool interactions can all be taxable
Not converting to GBP — all calculations must be in pounds sterling

Frequently Asked Questions

Do I pay tax on cryptocurrency in the UK?

Yes. HMRC treats cryptocurrency as property, not currency. Capital Gains Tax applies when you sell, swap, spend, or give away crypto. Mining and staking rewards are taxed as income.

Is swapping one cryptocurrency for another taxable?

Yes. Swapping one cryptocurrency for another (for example Bitcoin to Ethereum) counts as a disposal and is subject to Capital Gains Tax. The gain is calculated based on the value in pounds at the time of the swap.

What is the CGT allowance for crypto gains?

The annual exempt amount is £3,000 from 2024/25. This covers your total capital gains across all assets, not just crypto. Gains above this are taxed at 10% (basic rate) or 20% (higher/additional rate).

Does HMRC know about my crypto transactions?

HMRC receives data from cryptocurrency exchanges and uses blockchain analysis tools. Thinking crypto is anonymous is one of the most common mistakes people make. Accurate reporting is essential.

Sources

Check if you need to pay tax when you sell cryptoassets — GOV.UK
Cryptoassets Manual — GOV.UK
Capital Gains Tax rates — GOV.UK
Self Assessment tax returns — GOV.UK
Tax-free allowances on property and trading income — GOV.UK

Cryptocurrency & Tax: What You Need to Know