Crypto Tax UK: Expert Guide 2026
Our 2026 guide simplifies HMRC crypto tax rules and breaks down everything you need to know about UK crypto taxes, including how crypto is taxed and how to stay compliant.
HMRC treats crypto as property for tax purposes.
Profits from disposing of crypto (over the £3,000 tax-free allowance) are taxed as capital gains at 18% or 24%.
Income from crypto (like mining rewards) is taxed at 0% to 45%.
You must report crypto in your self-assessment tax return by January 31.
Is crypto taxed in the UK?
Yes. HMRC guidance states crypto may be subject to capital gains tax or income tax, depending on the transaction.
When do I pay tax on crypto in the UK?
In the UK, crypto is subject to capital gains tax when you dispose of it and income tax when you earn it.
Capital gains tax on crypto UK
Because HMRC sees crypto as a capital asset, when you dispose of it, you have a taxable event. Disposals include:
Selling crypto for GBP or another fiat currency
Trading crypto for crypto, including stablecoins and NFTs
Spending crypto on goods and services
Gifting crypto (unless it's to your spouse or civil partner)
Some DeFi transactions, including trading LP tokens
Any profits from these transactions are taxable capital gains. Any losses may be offset against taxable gains.
Every UK taxpayer gets a £3,000 annual tax-free allowance for capital gains. It’s only gains over this allowance that are taxable.
Income tax on crypto UK
Income tax generally applies whenever you earn crypto, including:
Getting paid in crypto (known as 'money's worth', NI also applies)
Airdrops, in some instances
Interest
DeFi transactions where you earn new tokens
How much tax do you pay on crypto in the UK?
You'll pay 18% or 24% tax on any capital gains from crypto that are over the tax-free allowance of £3,000.
For additional income from crypto over the £12,570 personal allowance, you'll pay between 20% to 45% in tax.
Find out what you owe with a crypto tax calculator.
What's the capital gains tax-free allowance?
Each taxpayer receives a £3,000 capital gains tax allowance each financial year. You'll only pay tax on any capital gains over this amount.
Capital gains tax rates
You’ll pay 18% or 24% on capital gains from crypto, depending on your total annual income:
| Tax Rate | Taxable Income |
|---|---|
| 18% | Basic Rate Income Band (up to £50,270) |
| 24% | Higher Rate Income Band (up to £150,000) |
| 24% | Additional Rate Income Band (more than £150,000) |
Income tax rates
You’ll pay between 0% to 45% on crypto income:
| Tax Rate | Taxable Income | Band |
|---|---|---|
| 0% | Up to £12,570 | Personal Allowance |
| 20% | £12,571 - £50,270 | Basic Rate |
| 40% | £50,271 - £125,140 | Higher Rate |
| 45% | £125,140+ | Additional Rate |
Taxpayers earning more than £125,140 a year do not receive the £12,570 personal allowance, and those earning more than £100,000 a year receive a reduced personal allowance.
Scottish taxpayers have slightly different Income Tax Bands. Read more about income tax in Scotland, or read our crypto tax rate UK guide.
£1,000 of income from trading or property is tax-free thanks to the Trading and Property Allowance. If you've got income from both, you can get £2,000 tax-free.
Tax-free crypto transactions
You do not trigger a taxable event when you:
Buy crypto with fiat currency, like GBP
Hold crypto
Transfer crypto between the wallets you own
Gift to your spouse or civil partner
Donate crypto to charity
Can HMRC track crypto?
Yes, HMRC can track cryptocurrency. It has:
A data-sharing program with UK exchanges
Crypto transaction data from as far back as 2014
KYC information from crypto exchanges
Under new regulations from 2026, all crypto exchanges operating in the UK must collect and share customer data with HMRC by 2027, or face fines of up to £300 per user. Information collected includes:
Full name
Address
Country of residence
Wallet address
Crypto transactions, including transfers, disposals, gross proceeds, and fair market values of assets
Look out for HMRC letters
HMRC has sent out more than 65,000 warning letters to investors it believes have failed to report crypto investments this year.
What happens if you don't report crypto?
It all depends on how HMRC views your behaviour:
Reasonable care: If you tried to report correctly but underpaid, you must disclose and pay tax for up to 4 years
Careless behaviour: If you didn’t take enough care in reporting your crypto gains, HMRC can recover tax for up to 6 years
Deliberate wrongdoing: If you intentionally misled HMRC or hid crypto income, you may be required to repay up to 20 years of tax
HMRC has a voluntary disclosure service specifically for crypto.
When do you report crypto taxes?
The UK financial year runs from the 6th of April to the 5th of April the next year, and you report any tax due in this period by January 31st the following year in your self-assessment tax return.
So, currently, you’d report tax due between 6 April 2025 and 5 April 2026 by 31 January 2027.
How to calculate crypto gains and losses for taxes
To calculate gains or losses from crypto, use the formula:
Proceeds - cost basis = capital gain/loss.
What are proceeds?
The amount you receive when you dispose of your crypto, which is usually its fair market value in GBP on the day of the sale or disposal.
What is cost basis?
Your cost basis is the original value of your crypto, including what you paid for it plus any allowable fees (such as purchase fees).
Example
Oscar bought 1 BTC for £30,000 and paid £100 in transaction fees. His cost basis is £30,100.
Later, Oscar sells his BTC for £50,000.
£50,000 - £30,100 = £19,900. This is his capital gain.
Are crypto losses deductible?
Yes. If you have a loss from a disposal, you can offset this against your taxable gains to reduce your tax bill.
There’s no limit to the amount of losses you can offset, so you can reduce your net gain to the £3,000 tax-free allowance. You can carry any unutilised losses forward indefinitely.
How to carry crypto losses forward
To carry forward capital losses with HMRC, you need to report them on your self-assessment tax return within four years. This applies even if your gains are low and you usually don't file a return.
If you don't file a return, you can write to HMRC to register your losses instead.
What about losses from theft?
HMRC does not consider theft or negligence as a capital loss, but you may be able to make a negligible value claim in some specific circumstances and later claim a capital loss.
Find out more in our HMRC lost crypto tax guide.
How to use HMRC’s share pooling accounting method
Because investors often hold multiple units of the same crypto bought at different prices, HMRC requires the 'share pooling’ method to determine cost basis. Work through these rules in order:
Same-day rule: If you buy and sell the same crypto on the same day, use that day’s purchases to determine the cost basis. If you sell more than you bought, move to the next rule.
Bed and breakfast rule (30-day rule): If you sell crypto and then buy the same asset again within 30 days, use the cost of those 30-day purchases for your calculation. If you sold more than you repurchased, move on.
Section 104 pool: If the first two rules don’t apply, use the Section 104 pool, an average cost method. Add up the total amount paid for all units of that asset and divide by the total units held to get your average cost basis.
These rules exist to prevent investors from excessively tax-loss harvesting.
How to calculate income from crypto
The value of your crypto income is the fair market value in GBP of the coins or tokens on the day you received them.
This is time-intensive for regular small rewards like mining or staking, but Koinly automates this process for you.
Example
You earn 0.005 BTC in mining rewards on August 10.
The fair market value of BTC that day is £90,000.
The value of your 0.005 BTC mining reward is £450.
You’ll pay income tax on £450.
What's fair market value?
FMV is the price an asset would reasonably sell for on the open market between a willing buyer and seller. For crypto, FMV can change significantly day to day.
How do you report crypto taxes to HMRC?
You report crypto in your self-assessment tax return. Read our complete guide on reporting crypto to HMRC, but in brief:
Report crypto capital gains and losses on: SA100 and Capital Gains Summary SA108 in the new Cryptoassets section.
Report crypto income on: Box 17 of your Self Assessment Tax Return (SA100).
You can do this online through the Government Gateway service, or you can file your self-assessment tax return with paper forms (but the deadline is October 31, not January 31).
If your net capital gain is less than the £3,000 tax-free allowance, you only need to report your crypto taxes to HMRC if:
Your gross proceeds of the disposals exceed £50,000 (even if your gains are lower than the allowance)
You’re registered for self-assessment
When is tax due on crypto?
When you file your tax return, HMRC will let you know the amount of tax due. The deadline to pay any tax due is January 31, the same as the filing deadline (so don’t leave it until the last minute).
How are different crypto transactions taxed in the UK?
With the basics out of the way, let’s dive into common transactions and the tax implications.
How is buying crypto taxed?
TAX FREEBuying crypto with fiat currencies, like GBP, is not a taxable event.
However, you must keep records of your transactions so you know your cost basis.
How is holding crypto taxed?
TAX FREEHolding crypto is a tax-free event in the UK.
How is transferring crypto between wallets taxed?
TAX FREETransferring crypto between your own crypto wallets or exchanges is tax-free.
However, transfer fees (like gas or network fees) may be a taxable disposal of cryptocurrency. HMRC guidance is clear that transfer fees are not an allowable cost.
Example
You transfer 1 ETH from Trust Wallet to Kraken. You pay a £5 gas fee to do so.
You need to calculate whether your £5 is a gain or a loss based on the cost basis of the portion of ETH you disposed of as a transfer fee.
A crypto tax calculator like Koinly can do this for you, and the settings allow you to choose whether to realise a gain or loss on this or simply write it off.
How are crypto-to-crypto trades taxed?
CAPITAL GAINS TAXTrading one crypto for another is a taxable disposal, regardless of the type of cryptocurrency, and any capital gain is taxable.
So whether you trade BTC, an altcoin, stablecoins, or an NFT, it’s all the same from a tax perspective.
How is selling crypto taxed?
CAPITAL GAINS TAXSelling crypto for fiat currency like GBP is a disposal and subject to capital gains tax.
Example
Archie buys 1 ETH for £1,500.
Later, Archie sells it for £3,000.
£3,000 - £1,500 = £1,500.
He has a capital gain of £1,500.
How is spending crypto taxed?
CAPITAL GAINS TAXSpending your crypto is subject to capital gains tax because you’re disposing of your asset.
If the price of your asset has increased since you acquired it, you have a capital gain. If it’s decreased, you have a capital loss.
How are crypto fees taxed?
HMRC allows some fees to be added to your cost basis, which can reduce your capital gains.
Example
Oscar buys 1 BTC for £50,000. He pays a £50 fee.
His cost basis is £50,050.
Later, Oscar sells his BTC for £60,000. He pays another £50 fee.
His cost basis is now £50,100, reducing his capital gain from £10,000 to £9,900.
How is mining crypto taxed?
INCOME TAXMining cryptocurrency in the UK can either be considered a hobby or a full-fledged business, depending on the degree of activity, organisation, commerciality, and risk.
Mining rewards from mining crypto as a hobby are classed as "miscellaneous income" and subject to income tax on receipt. If you later dispose of these tokens, you have a taxable disposal.
Mining rewards from mining crypto as a business are treated as trading profits. They’re still subject to income tax, but appropriate expenses are deductible. NI may also apply.
How is crypto staking taxed?
INCOME TAXStaking rewards are taxed as income on receipt. Any later disposal of staking rewards is a taxable event.
Depending on how you’re staking, these transactions may actually be classed as disposals. For example, using a liquid ETH staking protocol where you receive tokens representing your staked ETH may be classed as a crypto-to-crypto trade.
How are airdrops taxed?
INCOME TAXHMRC guidance states airdrops are taxable income upon receipt, in most instances.
The caveat is that you’ve done something to ‘earn’ your airdrop. This could be something as simple as sharing a social media post or using a given protocol.
If you later dispose of airdropped tokens, capital gains tax may apply.
Airdrops are not taxable income on receipt if you did nothing to earn them. For these airdrops, you’ll use a zero cost basis for later disposals.
Example
You receive 200 1INCH tokens from an airdrop. You qualified for this because you used the platform, so it’s taxable.
The fair market value of your tokens the day you receive them is £700. You’ll pay income tax on £700.
You later sell your tokens for £800. You have a £100 capital gain.
If your airdrop had not been taxable income, you would have a £800 capital gain as your cost basis would be zero.
How are hard forks taxed?
TAX FREEHMRC is clear that tokens from a hard fork are not taxable income.
The cost basis of any of these tokens is derived from existing tokens on the previous blockchain.
Disposals of tokens later on are taxable events.
How are crypto loans taxed?
TAXHMRC has very specific (and complicated) guidance on crypto loans. Tax can arise at different stages:
When you receive lending rewards
When you enter or exit a loan position
HMRC’s rules apply to all lending platforms, centralised or decentralised.
| Capital reward | Income reward |
|---|---|
| Reward comes from the asset increasing in value | Reward is paid by a borrower or platform |
| Amount is unknown/speculative when the loan starts | Amount is fixed or agreed up front |
| Paid once when the loan is repaid | Paid periodically (e.g., weekly/monthly) |
| Loan term is long or open-ended | Loan term is short or fixed |
| - | Reward paid for providing a service to the platform |
1. Tax on lending rewards
Not all rewards are automatically income. You must decide, with a tax professional, whether a reward is income or capital. HMRC gives indicators:
Income rewards are treated as miscellaneous income. Capital rewards are taxable gains at the point you receive the reward.
2. Tax when you enter or exit a loan position
CGT may apply when you enter or exit a lending position, depending on whether beneficial ownership of your tokens transfers:
If beneficial ownership does not transfer, there is no taxable event upon entering or exiting the loan, and rewards are taxed as income.
If beneficial ownership does transfer, then entering and exiting the loan is a taxable disposal, and CGT applies.
Beneficial ownership is a complex area, so speak to an experienced crypto accountant.
HMRC has an ongoing consultation surrounding the tax complexities in lending and DeFi, and has released a summary of responses. Legislation has not yet changed, but HMRC is considering making disposals at the point you loan/stake your crypto tax-free, effectively treating them as 'no gain, no loss' transactions. Instead, CGT would only apply when you economically dispose your asset.
How are crypto gifts taxed?
TAXGifting crypto to anyone other than your spouse or civil partner is a taxable disposal, and any gain is subject to capital gains tax.
If income tax has already been charged on the value of the gifted tokens, then the sales proceeds are reduced by the amount that has already been subject to income tax (section 37 of the CGT Act 1992).
If you gift crypto to your spouse or civil partner, this is tax-free, with no limit. You can use this loophole to lower your taxes.
Example
Mark buys 3 ETH for £1,000 each.
Later, he sells 2 ETH for £2,000 each. He has a capital gain of £2,000 and can use his capital gains tax-free allowance of £3,000 to pay no tax.
Mark wants to sell the remaining 1 ETH, but doesn’t want to pay tax. Instead, he gifts it to his wife, Hannah. This is a tax-free event.
Hannah receives 1 ETH and sells it for £2,000. She has a capital gain of £1,000. She can also utilise her tax-free allowance.
How are crypto donations taxed?
TAX FREEDonating crypto to a registered charity is tax-deductible in the UK.
If an individual donates crypto to charity, they are entitled to tax relief on the donated amount. They can get an exemption from capital gains tax, with two exceptions:
In case the individual sells the crypto assets to the charity at a cost that is more than the acquisition cost, they will have to pay CGT on the difference between the selling price (instead of the market price) and the acquisition cost.
Tainted donations are not tax-deductible. This refers to a donation where an individual has an arrangement with a charity to receive a financial benefit as a result.
How are crypto margin trades taxed?
CAPITAL GAINS TAXPrivate investors pay capital gains tax on realised gains from margin trades at the point they close their position.
Liquidations are also taxable disposals.
How are crypto derivatives and futures taxed?
TAX FREEThe FCA has banned crypto derivatives products for retail consumers without written consent. So profits from crypto futures sit in a bit of a legal grey area.
Spread betting in the UK is considered gambling-like speculation, meaning private investors don’t pay capital gains tax on profits.
How are DeFi transactions taxed?
TAXHMRC guidance says DeFi taxes all depend on the nature of the transaction, and whether that is capital or revenue:
Transactions with the nature of capital are subject to capital gains tax
Transactions with the nature of revenue are subject to income tax
It’ll all come down to how your specific DeFi protocol works, but in general, if you’re trading tokens (like LP tokens), you’ll pay capital gains tax. If you’re earning new tokens, you’ll pay income tax.
HMRC's DeFi consultation may impact the tax treatment of DeFi transactions in the future. Legislation hasn't changed yet, but HMRC may make disposals at the point you deposit your asset into specific lending and staking protocols tax-free (treating it as no gain, no loss).
How are NFTs taxed?
TAXNFTs are treated like any other crypto asset for tax purposes, meaning:
Buying an NFT with crypto is a taxable trade, and CGT applies
Selling or trading an NFT is a disposal, and CGT applies
Income tax may apply if you’re creating and selling NFTs like a business
How are crypto gambling winnings taxed?
TAX FREENo guidance from HMRC, but in general, gambling winnings in the UK are tax-free.
What about taxes when trading cryptocurrency as a business?
If you are carrying on a business that involves cryptocurrency transactions, the rules are more complex.
You may be liable to pay a number of different taxes, like CGT, Income Tax, Corporation Tax, Stamp Duties, and even VAT, depending on the type of transaction.
Crypto traders registered as businesses can refer to the Business Income manual (BIM56800) for more information on the relevant approach.
Share pooling rules for cryptoassets for companies
For UK companies, HMRC generally taxes cryptoassets using share pooling rules under section 104, similar to the rules that apply to individuals, but the same-day rule and a slightly amended 10-day bed and breakfast rule apply. The rules are applied in the following order:
Same-day rule: Tokens disposed of are first matched with tokens of the same type acquired on the same day.
10-day rule (“bed and breakfast” rule): If there are still tokens left to match, they are matched with tokens acquired within the next 10 days after the disposal.
Section 104 pool: If the disposal is not fully matched under the first two rules, the remaining tokens are matched with the section 104 pool, using a proportionate share of the pooled cost.
What records does HMRC want for crypto?
HMRC says investors should keep the following records:
The type of crypto asset
Date of the transaction
Whether the crypto assets were bought or sold
The number of units involved
The value of the transaction in pounds sterling
The cumulative total of the investment units held
Bank statements and wallet addresses, as these might be needed for an inquiry or review
Download transaction histories regularly from your exchanges and wallets, as they can lose your data or just delete it permanently after a certain period of time
Alternatively, crypto tax software like Koinly can help you maintain excellent records.
How to lower crypto taxes
You can’t legally avoid paying tax on crypto, but there are a few legal ways to avoid crypto taxes.
Utilise tax-free allowances
Make full use of your UK tax-free allowances, including the £3,000 CGT allowance, the £1,000 trading and property allowance, and the £12,570 personal income tax allowance.
Harvest losses
If your crypto has dropped in value, you can sell it to realise a capital loss and reduce your overall CGT tax bill. Investors do this strategically in a tactic known as tax loss harvesting.
Donate or gift crypto
Donating crypto to a UK-registered charity is generally exempt from capital gains tax, and gifts to spouses or civil partners are also tax-free, and can ensure you use up the entirety of both your tax-free allowances.
Why is reporting crypto taxes so difficult?
Put simply, current tax systems weren’t designed for crypto or the sheer number of transactions many investors make.
To report accurately, UK investors must track the cost basis of tokens across multiple exchanges and wallets, identify every taxable disposal, calculate all capital gains and losses using the share pooling method, and work out the value of any crypto income at the time it was received.
Collecting this information is hard. Most people don’t keep detailed records of every trade, fee and transfer, especially when activity is spread across several platforms. Trying to piece it all together manually often ends up being a painful exercise in Excel.
And that’s why Koinly exists: to make crypto tax simple
How to do crypto taxes with Koinly
A crypto tax calculator like Koinly saves you hours:
Sign up for a free account on Koinly.
Select your location (UK) and fiat currency (GBP).
Select your accounting method (the default, and only allowable, method is share pooling, which Koinly supports).
Automatically import all of your transaction data for every wallet, exchange, and platform you’ve used via API or upload CSV files.
Once Koinly has crunched the numbers, head over to the tax summary page. Check your figures and once you’re happy, upgrade to a paid plan from £39 to download a report. Koinly can generate the HMRC Capital Gains Summary, Income Report, and more for UK investors.
FAQs
⚖ Is cryptocurrency legal in the UK?
Yes. It's legal to buy, sell, trade, spend, and gift crypto in the UK - as well as many other investments. The only investment activities "banned" by the Financial Conduct Authority (FCA) are crypto derivatives and ETNs (although this ban is being lifted in October 2025). Even then, you're not going to end up in prison for opening a position. It is crypto exchanges operating in the UK that are unable to sell derivatives to UK retail consumers.
💰 Are stablecoins legal in the UK?
Yes. Stablecoins are legal in the UK. However, the FCA has published proposals to regulate stablecoin issuance, custody, and financial resilience, and aims to bring in new legislation by 2026. As well as this, the Bank of England has proposed capping systemic stablecoins at £10k–£20k per individual and £10m per business, arguing it would protect financial stability and bank deposits. As expected, crypto groups have criticised the proposal, arguing that the limits are heavy-handed, impractical to police, and would make the UK less competitive than other countries.
⛏ Is crypto mining legal in the UK?
Yes. Cryptocurrency mining is legal in the UK.
🚫 Can crypto tax be avoided in the UK?
No, you can't outright avoid crypto tax without facing the wrath of HMRC. However, there are many steps you can take to optimise your tax position before the EOFY. Learn more in our guide on how to avoid crypto tax in the UK.
📝 How is crypto tax calculated UK?
You can calculate your capital gain or loss from each sale, swap, or spend by subtracting your cost basis from your sale price/fair market value at the point of the transaction. If you're accounting for multiple assets of the same kind, you'll need to use the Share Pooling Cost Basis Method.
🕵♂️ Can HMRC track Bitcoin?
Yes, HMRC can track Bitcoin and other cryptocurrencies. HMRC has a data-sharing program with large centralised exchanges to ensure tax compliance.
💸 How much crypto can I sell without paying tax?
In the UK, provided your net capital gain is less than £3,000, you won't pay tax.
📅 Do you only pay tax on crypto when you cash out?
No. Selling is just one of the taxable disposals in the UK. You'll also pay tax on any profits when you swap, spend or gift (excluding to spouse) crypto in the UK. As well as this, many crypto transactions are subject to Income Tax upon receipt.
💰 Do I need to report crypto if I didn't sell?
No. You don't need to report held crypto to HMRC as this is tax free.
👀 Which crypto exchanges report to HMRC?
HMRC stated back in 2019 that they requested customer data from crypto exchanges that do business in the UK, including Coinbase, eToro, and CEX. You might recall that in 2020, Coinbase handed over data on UK customers who transacted more than £5,000 worth of cryptocurrency in 2019 and 2020.
From 2026, every crypto exchange that operates in the UK will be required to collect and share data with HMRC under new reporting requirements from OECD CARF.
