UK crypto taxes are administered by HMRC (His Majesty's Revenue and Customs). HMRC's position, set out in its Cryptoassets Manual, classifies crypto as capital assets — not currency. This means disposing of crypto (selling, exchanging, gifting, or spending) is a taxable event potentially subject to Capital Gains Tax (CGT). Crypto earned through mining, staking, or as employment income is subject to Income Tax. The rules are comprehensive and have specific anti-avoidance provisions that trip up many crypto traders.
Capital Gains Tax on Crypto in the UK
Every disposal of crypto creates a CGT calculation. Disposals include: selling crypto for GBP, exchanging one crypto for another, spending crypto on goods/services, and gifting crypto to anyone other than a spouse/civil partner. Non-disposals include: buying crypto (no CGT), transferring crypto between your own wallets, and holding crypto.
The Annual Exempt Amount (AEA) for CGT was dramatically reduced in 2024-2025 to £3,000 per tax year (down from £12,300). Gains above the AEA are taxed at 18% (basic rate taxpayers) or 24% (higher rate taxpayers) for crypto assets as of 2026. Note: CGT rates for crypto were aligned with residential property rates in the 2024 budget.
Cost basis uses the 'share pool' method with two anti-avoidance rules: 1) Same Day Rule: crypto bought and sold on the same day must be matched first. 2) 30-Day Rule (bed-and-breakfasting): crypto bought within 30 days after a sale is matched before older holdings. These rules prevent selling at a loss and immediately buying back to crystallize losses.
- ✓Annual Exempt Amount: £3,000 CGT-free gains per tax year (2026)
- ✓CGT rates: 18% (basic rate) or 24% (higher rate) on crypto gains
- ✓Share pool method: HMRC-specific cost basis calculation approach
- ✓Same Day Rule: same-day buys matched against same-day sells first
- ✓30-Day Rule: buys within 30 days after sale matched before pool
- ✓Disposals: sell, exchange, spend, or gift to non-spouse all trigger CGT
Income Tax on Crypto Earnings
Crypto earned is typically classified as income, not capital gains. Mining income: the market value of crypto at the time of receipt is taxable as trading income (if operating as a business) or miscellaneous income (if hobbyist). For mining as a hobby, the income is reported on Self Assessment under 'other income.' Trading expenses (electricity, equipment) may be deductible for business miners.
Staking rewards: HMRC currently treats most staking rewards as miscellaneous income — the GBP value at the time of receipt is taxable. When you later sell the staking rewards, CGT applies on any appreciation from the income value to the sale price. This double-taxation effect (income tax on receipt + CGT on gains) is a significant consideration for yield farmers and stakers.
Airdrops and hard forks: crypto received as an airdrop where you took no action is typically capital (potentially with nil acquisition cost). Airdrops in return for services (e.g., retweeting) are treated as income. Hard forks (like BCH from Bitcoin) create an allocation of the parent coin's cost basis to the new token.
- ✓Mining (hobby): miscellaneous income at GBP value on receipt date
- ✓Mining (business): trading income with deductible expenses
- ✓Staking rewards: miscellaneous income at receipt, then CGT on later appreciation
- ✓Airdrops for service: income tax on GBP value at receipt
- ✓Airdrops unsolicited: nil cost acquisition, CGT applies on entire sale proceeds
- ✓Employer crypto salary: subject to income tax and NI via PAYE as normal
How to Report Crypto to HMRC
Crypto must be reported via Self Assessment tax return. You must register for Self Assessment if you have crypto gains above the AEA, crypto income above £1,000 (trading allowance), or total crypto activity in the tax year. The UK tax year runs April 6 to April 5. Returns are due by January 31 following the tax year end.
HMRC has crypto-specific boxes on the Self Assessment return. Complete SA108 (Capital Gains Summary) for crypto CGT. The CGT computation requires: acquisition costs (using share pool method), disposal proceeds, and gains/losses for each disposal. HMRC requires records to be kept for at least 5 years after the filing deadline.
HMRC has been increasingly active in sending 'nudge letters' to crypto holders who haven't reported, using data from exchanges who share customer information under data request programs. Voluntarily disclosing previously unreported crypto is always treated more favorably than discovery via investigation.
- ✓Self Assessment: register if gains exceed AEA or crypto income exceeds £1,000
- ✓SA108: Capital Gains Summary form for crypto CGT reporting
- ✓Records required: all transactions, dates, amounts, GBP values — keep 5+ years
- ✓Tax year: April 6 – April 5 (UK is unusual globally with this non-calendar year)
- ✓Filing deadline: January 31 following the tax year (for online filing)
- ✓HMRC data requests: UK exchanges required to share customer data
Crypto Tax Software for UK Taxpayers
Manual calculation of crypto taxes is extremely complex with HMRC's same-day and 30-day rules. Software specifically designed for UK crypto taxes includes Koinly, TokenTax, CoinTracker, and Recap (UK-specific). These platforms connect to exchanges and wallets via API or CSV import, automatically apply HMRC's share pool rules, and generate HMRC-compatible tax reports.
Koinly is particularly popular in the UK — it correctly handles the Section 104 pool, same-day, and bed-and-breakfast rules, and produces SA108-compatible reports. Pricing starts at approximately £49 for a basic report covering up to 100 transactions.
For active traders with thousands of transactions, professional crypto accountants (tax specialists with crypto experience) may be worth the cost. They can identify legitimate deductions, optimize CGT allowances through strategic timing of disposals, and handle complex situations like DeFi, NFTs, and mining.
- ✓Koinly: most popular UK crypto tax platform, HMRC-specific share pool rules
- ✓Recap: UK-specific platform, strong HMRC compliance focus
- ✓CoinTracker: supports UK CGT calculations with HMRC rules
- ✓TokenTax: covers complex DeFi and NFT transactions
- ✓DIY risk: manual calculation errors are common and trigger HMRC investigation
- ✓Crypto accountants: specialists at firms like Blick Rothenberg, BDO, and crypto-native firms
Frequently Asked Questions: UK Crypto Tax
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