UK crypto tax, in plain terms

The two buckets: disposals and income

Almost every UK crypto tax question resolves faster once you sort the event into one of two buckets. HMRC’s Cryptoassets Manual treats privately held crypto as an investment asset in the vast majority of cases, which puts sales and swaps into the Capital Gains Tax bucket. Only where someone’s activity is intense and organised enough to amount to a financial trade does it shift to trading income — a bar most individuals never reach.[1]

The word that does the heavy lifting is “disposal”. Selling for pounds is a disposal — but so is swapping one token for another, spending crypto on goods or services, and giving coins away to anyone other than your spouse or civil partner. Each of these is measured at its sterling market value at the time, whether or not any pounds reached your bank account. Buying and holding, or shuffling coins between your own wallets, is not a disposal.[2]

Quick-reference table

Use this to locate your situation quickly; classification can vary with individual facts, so read it alongside the official guidance.

Working out Capital Gains Tax

Three steps: total up the year’s gains and losses across all disposals, subtract the annual exempt amount, then apply the rate to what remains.

• Annual exempt amount (AEA): £3,000 for 2025/26 — down from £6,000 in 2023/24 and £12,300 before that, which is why far more holders now cross the line than a few years ago. HMRC’s published figure for 2026/27 is also £3,000.[3]
• Rates: for disposals since 30 October 2024, crypto gains are taxed at 18% where they fall within your unused basic-rate band and 24% above it (previously 10%/20%).[3]
• Cost rules: the UK does not simply use first-in-first-out. Same-type tokens go into a Section 104 pool at average cost, modified by the same-day rule and the 30-day rule (the old bed-and-breakfasting defence), so selling and promptly rebuying cannot manufacture a loss.[1]
• Allowable costs: transaction fees, valuation costs and a proportion of pooled acquisition costs can reduce the gain; mining hardware and electricity cannot be set against capital gains.[2]
• Losses: offset gains in-year and carry forward — provided you claim them to HMRC within the time limit.

When Income Tax applies instead

Rewards are not gains. Mining, staking rewards, airdrops received in return for a service, and salaries or fees paid in crypto are generally taxed as income at their sterling value on receipt, with National Insurance possible on employment amounts. When you later dispose of those tokens, any growth since receipt is a separate capital gain — two events, two calculations.[2]

For 2025/26 in England, Wales and Northern Ireland: personal allowance £12,570, then 20% to £50,270, 40% to £125,140, 45% above that. Scotland sets its own bands, so residence within the UK changes the arithmetic.[4]

A worked example (mechanics only, not a tax estimate)

Say you did two things in one tax year: swapped some long-held ETH into BTC in the summer, then sold some of that BTC for pounds in March. The instinct that “nothing hit my bank until March” is exactly where UK filers go wrong — both steps are disposals:

• The swap: take the sterling market value of the ETH at the moment of the swap, subtract its average cost from your Section 104 pool, and you have gain or loss number one — despite receiving no cash.
• The sale: proceeds minus cost gives gain or loss number two. And the cost of that BTC is the ETH’s disposal value from step one — each step’s output feeds the next step’s input.
• The total: add both results, deduct the £3,000 exempt amount, and apply 18%/24% to the remainder.

The point is not the arithmetic; it is that swaps count, and that costs must chain from one disposal to the next. Doing this for real requires complete records — and for your own numbers, a professional, not this site.

Where people slip up

• Treating swaps as “no money moved”: ETH to USDT, ETH to BTC — all disposals at market value. The single biggest source of under-reporting.
• Forgetting that proceeds alone can require reporting: even with gains inside the exempt amount, you may still need to declare — for instance if you already file Self Assessment or your total disposal proceeds cross HMRC’s threshold. Check the current reporting rules rather than assuming.
• Never claiming losses: losses do not register themselves. Unclaimed within the time limit, they are gone when you need them.
• Filing from an exchange’s PnL export: platform reports rarely follow Section 104 pooling across venues and years. Treat them as raw material, not as the answer.
• Recording self-transfers as trades: a withdrawal to your own cold wallet is not a disposal, but if your records are vague, software may book it as a sale plus a purchase and invent a gain.

The grey zones: DeFi, NFTs, stablecoins, residency

HMRC’s position on these is still being refined; treat the following as bearings, not answers, and take specifics to the Manual and a professional:

• DeFi lending and liquidity: depositing tokens for interest-bearing receipts or LP tokens can itself be a disposal, and returns can be capital or income depending on whether beneficial ownership passed. The Cryptoassets Manual devotes a whole section to it.[1]
• NFTs: bought and sold like any chargeable asset, but each NFT generally stands alone rather than entering a pool.
• Stablecoins: no special carve-out — swapping BTC into USDT is still a disposal, however small the price wobble afterwards.
• Residency and cross-border facts: your UK liability depends on tax residence, and the rules for non-residents and those with overseas ties have been in flux. Cross-border cases belong with an adviser.

Filing and deadlines (2025/26)

• Tax year: 6 April 2025 to 5 April 2026.
• Registering for Self Assessment: first-time filers must register by 5 October 2026.
• Returns: paper by 31 October 2026; online filing and payment by 31 January 2027. Capital gains go on the SA108 pages.
• HMRC’s real-time CGT service can also take in-year reports of some disposals.

One more thing: HMRC already receives exchange data

Since 1 January 2026, UK crypto platforms have been required to collect user and transaction information under the UK’s implementation of the OECD’s Crypto-Asset Reporting Framework, with first reports due to HMRC by 31 May 2027. In other words, the era in which an exchange account was invisible to the tax authority is ending on a published timetable. Accurate filing now is considerably cheaper than reconciliation later — the full timeline is in our CARF guide.[6]

What to keep

HMRC expects you to be able to reconstruct every disposal: token, quantity, dates, sterling value at acquisition and disposal, counterparty or platform, fees, and wallet addresses. Most exchanges export transaction histories — download them regularly rather than at filing time, since platforms close and histories vanish. Field-by-field detail in Keeping transaction records.

FAQ

Official sources

• [1] HMRC, Cryptoassets Manual — gov.uk/hmrc-internal-manuals/cryptoassets-manual
• [2] HMRC, Check if you need to pay tax when you sell / receive cryptoassets — gov.uk/guidance/…sell-cryptoassets
• [3] HMRC, Capital Gains Tax: rates and allowances — gov.uk/capital-gains-tax/rates
• [4] HMRC, Income Tax rates and Personal Allowances — gov.uk/income-tax-rates
• [5] HMRC, Self Assessment tax returns: deadlines — gov.uk/self-assessment-tax-returns/deadlines
• [6] HMRC, Cryptoassets Manual: the Cryptoasset Reporting Framework (CRYPTO49000) — gov.uk/…/crypto49000

Figures apply to the 2025/26 tax year and were checked against the official pages on 1 September 2026. HMRC’s pages take precedence if they have since changed.