How crypto is taxed in the UK
When you pay Capital Gains Tax vs Income Tax, why swaps count as disposals, pooling rules — and how exchanges now report your data to HMRC.
The big picture: two taxes, not one
HMRC doesn't treat crypto as currency — for individuals it is a chargeable asset, like shares. That means most people meet crypto tax through Capital Gains Tax when they dispose of coins. But some ways of receiving crypto are taxed as income first. Knowing which side of the line you're on is most of the battle.
| Event | Tax |
|---|---|
| Selling crypto for pounds | Capital Gains Tax |
| Swapping one coin for another | Capital Gains Tax |
| Spending crypto on goods or services | Capital Gains Tax |
| Gifting crypto (except to your spouse) | Capital Gains Tax |
| Mining or most staking rewards | Income Tax (then CGT when sold) |
| Airdrops received for doing something | Income Tax (then CGT when sold) |
| Being paid in crypto by an employer | Income Tax + National Insurance |
| Buying and simply holding | No tax |
| Transferring between your own wallets | No tax |
Capital Gains Tax: the usual case
For 2026/27, your total gains above the £3,000 annual exempt amount are taxed at 18% within your unused basic-rate band and 24%above it — the same rates as shares. The gain is the disposal value minus your allowable cost, both measured in pounds at the time.
Worked example: swap, then sell
| Bought 1 BTC | £30,000 |
| Swapped it for ETH when BTC was worth £42,000 → gain | £12,000 |
| Later sold the ETH for £45,000 (cost £42,000) → gain | £3,000 |
| Total gains | £15,000 |
| Less annual exempt amount | − £3,000 |
| Taxable gain (all within basic-rate band) | £12,000 |
| CGT at 18% | £2,160 |
Pooling: how your cost is actually worked out
You don't pick which coins you sold. HMRC requires share pooling: all your units of the same token sit in one “section 104 pool” with an averaged cost. Two exceptions override the pool:
- Same-day rule — coins bought the same day you sell are matched first
- 30-day rule — coins bought within 30 days after a sale are matched next (this blocks “sell and instantly rebuy” to harvest losses)
When crypto is income, not gains
Mining rewards, most staking returns, and airdrops you did something to earn are miscellaneous income, taxed at your income tax rate on the pound value when received. That value then becomes your cost for CGT when you eventually sell. Earnings from an employer paid in crypto are salary — income tax and National Insurance through payroll.
HMRC can now see your trades: CARF
From 1 January 2026, under the OECD's Cryptoasset Reporting Framework, crypto exchanges and platforms serving UK users must collect identity details (name, address, National Insurance number) and report users' transactions to HMRC. The first reports cover 2026 and are due by 31 May 2027, with data exchanged automatically between roughly 48 countries — including for accounts on overseas exchanges.
Losses and dead tokens
Losses on disposals offset your gains, and unused losses carry forward — but you must report them to HMRC within four years. If a token has become worthless (a collapsed project, a rug pull), a negligible value claim lets you crystallise the loss while still technically holding the asset.
Records to keep
- Date, type and amount of every transaction
- Value in pounds at the time (exchange rate used)
- Wallet addresses and exchange statements
- Costs: fees, and the pooled cost of each token
Exchanges close and delist coins — export your history regularly. Under CARF, HMRC will have its own copy of your data, so yours needs to match.
Frequently asked questions
Do I pay tax on cryptocurrency in the UK?
Usually yes, once you dispose of it. Selling crypto for pounds, swapping one coin for another, spending it, or gifting it (except to your spouse) are all disposals subject to Capital Gains Tax — 18% or 24% on total gains above the £3,000 annual allowance in 2026/27. Some receipts (mining, staking, airdrops for a service) are taxed as income instead.
Will HMRC know about my crypto?
Yes. From 1 January 2026, under the Cryptoasset Reporting Framework (CARF), UK and overseas exchanges must collect your identity and report your transactions to HMRC, with the first reports due by 31 May 2027 and data exchanged between around 48 countries. Assume HMRC can see your trading activity.
Is swapping one crypto for another taxable?
Yes — this surprises many people. Trading BTC for ETH is a disposal of your BTC at its market value at that moment, even though you never touched pounds. Any gain on the BTC since you acquired it counts towards Capital Gains Tax.
How are staking and mining rewards taxed?
Rewards from mining, most staking, and airdrops received in return for doing something are taxed as miscellaneous income at your income tax rate, based on the market value in pounds when you receive them. When you later sell those coins, any further gain is subject to Capital Gains Tax on top.
What if my crypto lost value or the token is dead?
Selling at a loss creates a capital loss that offsets your gains, and unused losses carry forward indefinitely (report them within four years). If a token has become essentially worthless, you can make a negligible value claim to crystallise the loss without selling.
How do I report crypto gains to HMRC?
Through Self Assessment by 31 January after the tax year, or HMRC’s real-time Capital Gains Tax service if you don’t normally file a return. You need to report if your gains are over the £3,000 allowance — keep records of every transaction in pounds.
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