Crypto Tax UK: How HMRC Taxes Bitcoin and Cryptocurrency
HMRC treats cryptocurrency as property, not currency. This means every disposal (selling, swapping, spending, or gifting crypto) is potentially subject to Capital Gains Tax. The same £3,000 annual exempt amount applies.
Capital gains arise when you sell or swap crypto for more than you paid. HMRC requires Section 104 pooled cost basis — your average cost per coin across all purchases — with same-day and 30-day matching rules taking priority. This means buying back the same token within 30 days of selling ("bed and breakfasting") does not create a usable loss.
Income tax applies to crypto received as payment for work, mining rewards, staking rewards, and airdrops related to existing holdings. These are taxed as miscellaneous income at your marginal rate when received, and the market value at that point becomes your cost basis for future CGT.
HMRC has exchange data sharing agreements and uses blockchain analytics. Accurate record-keeping of every transaction — including DeFi interactions — is essential.
Frequently Asked Questions
Do I pay tax on crypto I have not sold?
No. Simply holding crypto (even if its value increases) does not trigger a tax event. Tax only applies when you dispose of it.
Is swapping one crypto for another taxable?
Yes. HMRC treats a crypto-to-crypto swap as a disposal of one asset and an acquisition of another. CGT applies to any gain on the disposed asset.
Do I need to report crypto on Self Assessment?
Yes, if your total gains exceed the annual exempt amount or total disposal proceeds exceed 4 times the AEA. You report on the SA108 supplementary pages.
Learn more in our free courses
Try these free tools
Related guides
Put your knowledge into practice
CoreFi tracks your finances, calculates your tax, and helps you build wealth. Free to start.
Get started freeEducational only. Not financial, tax, or legal advice. CoreFi is not regulated by the FCA.