HMRC has been increasingly focused on cryptocurrency tax compliance. Here's what you need to know.
The Basic Rule
Cryptocurrency is treated as property, not currency. This means selling, swapping, or spending crypto is a disposal that can trigger Capital Gains Tax. You're taxed on the profit (gain) between what you paid and what you received.
When You Owe Tax
Capital Gains Tax applies when you: sell crypto for GBP or any fiat currency, swap one crypto for another (e.g., Bitcoin to Ethereum), spend crypto to buy goods or services, or give crypto to someone (not your spouse).
Income Tax applies when you: receive crypto as salary or payment for services, mine cryptocurrency, earn staking or DeFi yield rewards, or receive airdrops.
How Much Tax?
You get a £3,000 annual CGT exemption (2025/26). Gains above this are taxed at 18% (basic rate) or 24% (higher rate). The rate depends on your total income. Use our CGT calculator.
Example: You bought 1 BTC for £20,000 and sold for £35,000
Gain: £15,000
Less annual exemption: -£3,000
Taxable gain: £12,000
Tax (basic rate, 18%): £2,160
Record Keeping
HMRC requires you to keep records of every transaction: the date, the type and amount of crypto, the value in GBP at the time, and any fees. Use crypto tax software (Koinly, CoinTracker) to automate this.
Reporting
Report crypto gains through Self Assessment. Even if your gains are within the £3,000 exemption, if your total disposal proceeds exceed £49,200, you must still report.
Practical Crypto Tax Tips
HMRC treats cryptocurrency as property, not currency. This means every disposal (selling, swapping one crypto for another, or spending crypto) is a potentially taxable event for Capital Gains Tax (CGT). You have an annual CGT allowance of £3,000 (2025/26), and gains above this are taxed at 18% for basic rate taxpayers or 24% for higher rate taxpayers. The key word is "gains" — you only pay tax on the profit, not the total amount you sold. If you bought Bitcoin at £10,000 and sold at £15,000, your gain is £5,000 and you would pay CGT on £2,000 (after the £3,000 allowance).
Record keeping is essential. HMRC can request transaction records going back 20 years if they suspect non-disclosure. Use portfolio tracking software to log every purchase, sale, and swap with dates, amounts, and GBP values at the time of each transaction. If you are mining or staking crypto, the income is subject to Income Tax rather than CGT. Airdrops may be taxed as either income or capital gains depending on the circumstances. For detailed calculations, see our crypto tax calculator and capital gains tax calculator.
Calculate your capital gains
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