If you’ve bought, sold, traded, or earned crypto in the UK, you probably owe tax on it. Don’t worry, this guide explains exactly what you need to know.

Is crypto taxed in the UK?

Yes. There isn’t a special ‘crypto tax’, but HMRC treats crypto as property, which means it’s caught by existing tax rules. Depending on what you’ve done with your crypto, you may need to pay Capital Gains Tax (CGT), Income Tax, or both.

HMRC is watching, but you’re not alone.

HM Treasury estimates that 55–95% of UK crypto holders haven’t declared their crypto taxes. From January 2026, UK exchanges must report your transaction data directly to HMRC under CARF. What you declare will be checked against what HMRC already knows.

The good news? Getting compliant is straightforward with the right tools. That’s what this guide is for.
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Capital Gains Tax (CGT)

CGT applies when you ‘dispose’ of crypto. In plain English, a disposal is any time you:

• Sell crypto for pounds (or any other fiat currency)
• Swap one crypto for another (e.g. Bitcoin for Ethereum)
• Gift crypto to someone (unless it’s your spouse or civil partner)
• Spend crypto on goods or services
• Pay a network fee to transfer crypto (more on this below)
• Enter certain DeFi transactions where you lose control of your tokens
  

You only pay CGT on the profit. The difference between what you paid for the crypto and what it was worth when you disposed of it. And everyone gets a tax-free allowance each year:

CGT rates: five-year overview

*2024/25 is a split year: disposals before 30 October 2024 are taxed at 10%/20%; disposals on or after 30 October 2024 are taxed at 18%/24%.

If your total capital gains (from crypto and other assets like shares) stay under the annual allowance, you don’t owe any CGT. If your basic rate income tax band isn’t fully used, the leftover can be applied to your gains for the lower CGT rate.

Worked example: James sells Bitcoin

James buys 0.5 BTC in January 2022 for £14,250 (£28,500 per BTC).

In October 2025, he sells the 0.5 BTC for £37,500 (£75,000 per BTC).
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Capital gain: £37,500 − £14,250 = £23,250
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After the £3,000 annual allowance, his taxable gain is £20,250.

As a basic rate taxpayer, James pays 18% = £3,645 in CGT.

Try this example in Recap’s calculator.
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Network fees: a hidden taxable event

This one catches people out. Even moving Bitcoin between your own wallets can trigger a small tax bill. The network fee you pay to process the transfer is technically a disposal, you’re spending crypto to pay for a service.

If the value of that crypto has gone up since you acquired it, you’ve made a tiny capital gain on the fee.

Worked example: Sophie transfers BTC to her Ledger

Sophie transfers 0.5 BTC from Coinbase to her Ledger wallet. The network fee is 0.0003 BTC.

Her pooled cost basis is £30,000/BTC. BTC is worth £75,000 at transfer time.
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Cost basis of fee: £9. Disposal proceeds: £22.50. Capital gain: £13.50.
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Tiny on its own, but frequent transfers add up. And CARF data will show every on-chain movement.
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‍How to calculate your cost basis: share pooling

The UK uses a method called ‘share pooling’ to work out the cost basis of your crypto. It’s different from the FIFO (First In, First Out) method used in many other countries, which is why UK-specific tools like Recap are essential.

HMRC requires you to apply three rules, in this order:

1. Same-day rule: If you buy and sell the same crypto on the same day, those purchases are matched against the sale first.

2. Bed and breakfasting (30-day) rule: If you sell crypto and buy the same asset again within the next 30 days, the cost of that repurchase becomes your cost basis for the sale, not the original pooled cost. Purchases are matched on a first-in, first-out basis. This stops you from creating artificial losses by selling and quickly rebuying.

3. Section 104 pool: If neither rule above applies, your cost basis is the average cost of all units of that asset in your pool. Each crypto (BTC, ETH, SOL, etc.) has its own pool. NFTs are not pooled, each one is treated individually.

These rules make manual calculation complex, especially if you trade frequently. Recap applies them automatically when you connect your exchanges and wallets.
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‍Income Tax

When you receive crypto as a reward or payment, Income Tax usually applies. HMRC says the following activities are taxed as income:

• Getting paid in crypto (salary or freelance)
• Mining rewards 
• Staking rewards
• Liquidity pool rewards 
• Lending rewards
• Some airdrops (those received in return for a service) 

Most crypto income should be reported as ‘miscellaneous income’ on your SA100 tax return, based on the pound sterling value when you received it, minus any allowable expenses.

A quick note on timing: some crypto income—particularly staking rewards—can be taxable from the point it’s ‘receivable’ (credited to your account and available to claim), even if you haven’t actually withdrawn it yet. This matters if your rewards auto-compound or you’re leaving them unclaimed.

Income tax rates

The Personal Allowance reduces by £1 for every £2 of adjusted net income above £100,000. There’s also a £1,000 trading/miscellaneous income allowance — if your total crypto income is below this, there’s no income tax to pay.

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What’s NOT taxable?

Not everything triggers a tax bill. These are all tax-free:

• Buying crypto with pounds (or any fiat currency)
• Holding crypto without selling it
• Gifting crypto to your spouse or civil partner
• Donating crypto to a qualifying charity
• Transferring crypto between your own wallets (but watch those network fees)
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CARF: what changes from 2026

From 1 January 2026, UK crypto exchanges must collect and report your transaction data directly to HMRC under the Cryptoasset Reporting Framework (CARF). This aligns the UK with the OECD’s international framework for crypto tax transparency.

Here’s what exchanges will report: your name, address, date of birth, tax residency, National Insurance number, and full transaction records including values, asset types, and transaction types. The first reports are due by 31 May 2027, covering the 2026 calendar year.

What does this mean for you? HMRC will have an independent record of your crypto activity. What you declare on your self-assessment needs to match what exchanges report, or your return may be flagged.
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Haven’t filed yet? You’re not alone

HM Treasury estimates that 55–95% of UK crypto holders are non-compliant. If that includes you, the best thing you can do is act now.

HMRC’s Cryptoasset Disclosure Service lets you make a voluntary ‘unprompted’ disclosure with reduced penalties (up to 30%). If you wait for HMRC to contact you first, penalties can reach 70–100%+, plus interest from the original due date.

There’s a silver lining too: capital losses can be claimed up to four years back. Getting compliant now might actually reduce your overall tax bill.

How to file: the Recap + Crunch workflow

You don’t need to become a tax expert. Just follow these four steps:

1. Set up Recap. Create a free account at recap.io.
2. Connect your exchanges and wallets. Recap integrates with all major UK platforms via API or CSV upload.
3. Review your transactions. Recap applies UK share pooling rules automatically and calculates your gains, losses, and income.
4. Share with your Crunch accountant. They’ll use your Recap report to complete your self-assessment, including the new SA108 cryptoasset section.

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FAQs

Do I need to pay tax on crypto in the UK?

Yes. HMRC treats crypto as property. You may owe CGT when you sell, swap, spend, or gift crypto, and Income Tax when you earn it (e.g. from mining or staking).

Do I pay tax if I just hold crypto?

No. Simply holding crypto isn’t a taxable event. Tax only kicks in when you dispose of it or earn it as income.

What’s the crypto tax-free allowance?

For 2024/25 and 2025/26, the CGT annual exempt amount is £3,000. Gains below this aren’t taxable.

Can HMRC track my crypto?

Yes. HMRC has been receiving data from exchanges since 2019. From 2026, CARF means all UK exchanges report automatically.

Do I need to report crypto if my gains are under £3,000?

No. If your total capital gains are below the annual allowance, you don’t need to report them. But you should still keep records.

What happens if I don’t report my crypto?

HMRC can charge penalties of up to 200% of the tax owed, plus interest. Voluntary disclosure significantly reduces penalties.

Is transferring crypto between my own wallets taxable?

The transfer itself isn’t taxable, but the network fee is a disposal and may create a small capital gain.

What’s the SA108 cryptoasset section?

From the 2024/25 tax year, HMRC’s self-assessment includes a dedicated section for reporting crypto gains and losses. This will be cross-checked against CARF data.

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How to file your crypto taxes in the UK

In the UK, reporting crypto taxes is part of the annual Self Assessment process. The UK tax year runs from 6th April to 5th April. For the 2024/25 tax year (6 April 2024 to 5 April 2025), the key deadlines are:

• 5 October 2025: Register for Self Assessment if you haven't filed before.
• 31 October 2025: Deadline for filing a paper tax return.
• 31 January 2026: Deadline for filing your online tax return and paying the tax you owe.

Capital gains and losses from crypto activities should be combined with gains and losses from other sources and reported on the Capital Gains Summary (SA108) supplementary pages.

Miscellaneous income from crypto should be reported as 'Other taxable income' in Box 17 of the main SA100 tax return form. Any allowable expenses, including the trading allowance if applicable, can be reported in Box 18.

How to prepare for UK tax season

Calculating your crypto taxes can be daunting, especially for first-time filers, so here are some tips:

1. Get on top of record-keeping: You'll need records of all your crypto activity, including historical transactions, to ensure your tax calculations are accurate and you don't end up under- or over-paying.
2. Use a suitable crypto tax calculator: Calculator tools like Recap make calculating tax on your crypto simple and are especially useful when you have a lot of transactions. Simply connect your accounts or add CSV data, and the software applies fiat valuations and the appropriate tax treatment to generate your crypto tax report.
3. Consult a tax professional: Crypto tax is confusing, even more so if you're into DeFi, NFTs, or have a complex trading history, so getting specialist crypto tax advice from an accountant is invaluable. As well as helping you navigate filing your tax return, many will also be able to help you with tax strategies to lower your tax bill.
4. Stay updated on the latest guidance: Crypto is evolving quickly and so is regulation. Ensure you know how your crypto activity is taxed by staying informed with resources.

The information provided in this article is for general informational purposes only and should not be construed as financial or tax advice. We recommend consulting with a qualified tax advisor or financial professional who can provide personalised advice tailored to your specific circumstances.

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