Let’s break UK crypto tax down
Cryptocurrency is treated as property by HMRC, not currency. That means when you buy, sell, trade, or earn crypto, you might owe tax — depending on what you do with it. This page gives you a plain-English guide to how UK crypto tax works, what HMRC expects, and how to stay on the right side of the rules.
Quick Overview
There are two main types of tax you might pay on crypto:
- Capital Gains Tax (CGT)
- Income Tax
HMRC doesn’t tax the crypto itself — they tax the gains or income you make from it.
When You Might Owe Capital Gains Tax
You may owe Capital Gains Tax if you:
- Sell crypto for GBP
- Swap one crypto for another (e.g. BTC to ETH)
- Spend crypto on goods or services
- Gift crypto to someone (except your spouse)
You’ll only owe CGT if your total gains exceed the tax-free allowance in a tax year (currently £3,000 as of 2025).
Capital Gains Tax Example:
If you bought £1,000 of ETH and later sold it for £4,000, your gain is £3,000. If that’s your only gain that year, you wouldn’t owe tax. But if you had other gains, you might go over the allowance.
When You Might Owe Income Tax
You may owe Income Tax if you:
- Receive crypto as payment for work
- Earn staking rewards
- Earn mining rewards (unless you’re classified as a business)
- Receive airdrops (depending on how and why you got them)
Crypto earned through these activities is typically treated like regular income. It must be declared and is taxed at your Income Tax rate.
What Records Should You Keep?
HMRC expects you to keep detailed records of your crypto transactions, including:
- Dates of acquisition and disposal
- Value in GBP at the time of each transaction
- Type of crypto asset
- Nature of the transaction (buy/sell/swap/earn)
- Wallet and exchange information
Using a crypto tax tool like Koinly can help automate this process.
What About Lost or Stolen Crypto?
HMRC doesn’t consider lost or stolen crypto as a disposal for tax purposes. However, in some cases, you may be able to make a negligible value claim if your crypto is permanently worthless.
Do You Need to Submit a Tax Return?
You may need to submit a Self Assessment tax return if:
- You owe Capital Gains Tax above the allowance
- You earned taxable crypto income
- HMRC has sent you a notice to file a return
Even if you don’t owe anything, you’re still expected to keep accurate records.
Tools to Help You File
Manually calculating your crypto tax is complex. Crypto tax tools like Koinly, CoinTracker, and Accointing integrate with wallets and exchanges to help:
- Track gains/losses
- Classify transactions
- Generate tax reports for HMRC
Choosing the right tool can save you hours of admin and reduce your risk of costly mistakes.
In Summary
Crypto tax in the UK isn’t as complicated as it might seem — but it’s not something you can afford to ignore. As HMRC ramps up scrutiny on digital assets, staying compliant means being proactive:
- Understand how different types of crypto activity are taxed
- Keep detailed records of all your transactions
- Use the right tools to calculate and report accurately
The earlier you get your tax position sorted, the fewer surprises you’ll face — and the more confident you’ll be come tax season. Whether you’re a casual investor or deep into DeFi, getting it right now could save you time, stress, and money later.
Have questions? Check our blog or explore the latest crypto tax tools to make it simple.