Most UK crypto holders know they should probably be paying tax on their gains, but have no idea where to start. HMRC’s rules aren’t complicated once you know the basics — and the good news is that plenty of people owe less than they think.
This guide explains exactly what tax you owe, when you owe it, and how to report it. We use plain English, not accounting jargon.
Do You Have to Pay Tax on Crypto in the UK?
Yes — but only when a taxable event occurs. Simply holding Bitcoin, Ethereum, or any other cryptocurrency in a wallet is not a taxable event. HMRC treats crypto as a capital asset (similar to shares or property), so tax is triggered when you dispose of it.
The main taxable events are: selling crypto for GBP, swapping one cryptocurrency for another, using crypto to pay for goods or services, and gifting crypto to someone other than your spouse.
Things that are not taxable: buying crypto with GBP, moving crypto between wallets you own, holding crypto that goes up in value (until you sell).
Capital Gains Tax on Crypto — How It Works
When you dispose of a crypto asset, you calculate your gain as: proceeds (what you received) minus allowable costs (what you paid). The resulting profit is your capital gain.
The CGT rates for 2025 are:
- 18% if your total income plus gains keep you in the basic rate tax band
- 24% if any of your gains push you into the higher rate band
These rates apply to crypto as well as shares and most other assets (property has slightly different rates).
One important rule: if you buy and sell the same crypto within 30 days, HMRC applies the “bed and breakfast” rule, which prevents you from selling at a loss to crystallise a gain then immediately rebuying. The cost basis for the repurchase gets matched to the sale.
The UK Crypto CGT Allowance for 2025/26
Every UK taxpayer has an annual Capital Gains Tax allowance — the amount of gains you can make each year completely tax-free. For 2025/26, this is £3,000.
This covers your total gains across all assets, not just crypto. If you’ve also sold shares or a second property in the same tax year, those gains count towards the same £3,000 allowance.
Note: the allowance was £12,300 as recently as 2022/23 and has been cut significantly. HMRC is actively encouraging compliance — don’t assume small gains are invisible.
| Activity | Tax Type | When Does Tax Apply? |
|---|---|---|
| Selling crypto for GBP | Capital Gains Tax | When you sell |
| Swapping coin for coin | Capital Gains Tax | At point of swap |
| Staking rewards | Income Tax | When received |
| Mining income | Income Tax | When received |
| Airdrops | Income Tax (usually) | When received |
| Moving between own wallets | Not taxable | No tax event |
Crypto Income Tax — Staking, Mining, and Airdrops
Not all crypto is taxed as capital gains. If you receive crypto as income — through staking, mining, or certain airdrops — it’s taxed as income at your marginal rate (20%, 40%, or 45%).
For staking rewards, HMRC says you must declare the GBP value of the tokens on the day you receive them as income. When you later sell those staking rewards, you’ll also owe CGT on any increase in value since you received them.
Airdrops are usually taxable as income unless they were received without doing anything to earn them. If you signed up to a project or completed tasks to receive tokens, HMRC considers that income. If tokens were dropped to your wallet completely unsolicited, they may not be taxable until disposal — but this area is still developing in HMRC guidance.
How to Report Crypto to HMRC
Crypto gains must be reported on your Self Assessment tax return. The deadline for online Self Assessment is 31 January following the tax year end (5 April). So for the 2024/25 tax year, you must file and pay by 31 January 2026.
If you’ve never done Self Assessment before, you’ll need to register with HMRC first — do this well before the deadline as it can take a few weeks to get your Unique Taxpayer Reference (UTR).
To fill in your return, you’ll need records of every disposal: date, amount sold, proceeds in GBP, and original cost in GBP. This is why keeping records from day one matters — reconstructing transaction history years later is painful.
How to Reduce Your Crypto Tax Bill Legally
Use your full CGT allowance each year. If you haven’t realised £3,000 in gains yet, consider selling some profitable holdings before 5 April to use up the allowance, then rebuying (after 30 days to avoid the bed-and-breakfast rule).
Offset losses against gains. Crypto losses can be used to reduce your taxable gains. If you sold at a loss in the same tax year, those losses reduce your overall gain. You can even carry losses forward to future years if you report them on your Self Assessment return.
Transfer to your spouse. Transfers between spouses or civil partners are exempt from CGT. If your partner has unused CGT allowance, transferring some holdings to them before selling can halve your tax bill.
Use crypto tracking software. Tools like Koinly and CoinTracking connect to exchanges via API and calculate your gains automatically. They also generate HMRC-compatible tax reports. The cost of the software is itself tax-deductible as an allowable cost.
What Happens If You Don’t Report?
HMRC has significantly increased its focus on crypto non-compliance. They use a system called Connect, which cross-references data from banks, exchanges, and third parties. Major UK exchanges (Coinbase, Kraken) share customer data with HMRC.
HMRC has sent thousands of “nudge letters” to crypto holders encouraging them to check whether they owe tax. Penalties for failure to declare gains range from 30% to 100% of the unpaid tax, plus interest. Deliberate evasion can lead to criminal prosecution.
The risk of being caught is real and growing. If you’ve had gains in previous years you haven’t declared, HMRC’s Voluntary Disclosure service lets you come forward — penalties are much lower than if HMRC finds you first.
Frequently Asked Questions
Do I pay tax when I buy crypto?
No. Buying crypto with GBP is not a taxable event. Tax is only triggered when you dispose of it (sell, swap, spend, or gift).
What if I made a loss on my crypto?
Losses can be offset against gains in the same tax year or carried forward to reduce future gains. You must report losses to HMRC to use them — they aren’t automatically applied.
Do I need to declare crypto under £3,000?
If your gains are below the £3,000 CGT allowance, you don’t owe any tax. But you should still keep records, and you may need to disclose if your total proceeds (not profits) were over £50,000 in the tax year.
Is crypto-to-crypto taxable in the UK?
Yes. Swapping Bitcoin for Ethereum (or any other coin-to-coin trade) is a disposal and triggers CGT on any gain. This catches many people off guard — you don’t need to convert to GBP for tax to apply.
Ready to keep your crypto safe while you sort your taxes? Check out our best crypto wallets UK guide, or find a regulated exchange in our best crypto exchanges UK comparison.
