In the UK crypto isn’t treated as currency, it’s considered a form of property. This distinction is important, because it defines how crypto is taxed. Rather than creating a dedicated crypto tax regime, HMRC applies existing tax laws and interprets them based on the nature of each transaction. The key principle is that tax treatment depends not on the technology, but on what you actually do with the asset.

Since 2018, HMRC has published formal guidance to clarify how general tax rules apply to crypto. This includes how to treat capital gains, when income tax applies, and how to report everything through the Self Assessment. In practice, what matters is not the platform or the wallet you used, but the type of transaction, whether it created a gain or income and how it fits into the general tax framework.

This can quickly become complex if you’ve used multiple platforms or moved assets across wallets. The rules are detailed but the burden of tracking, calculating, and declaring remains entirely on you.

If you hold crypto, you’re expected to track every transaction, apply the right tax treatment, and report it using the correct forms, no matter which platform or wallet you used. There’s no automatic reporting, and no simplified rules just because the asset is digital. Through this guide, you’ll learn how to apply HMRC’s framework correctly, avoid common mistakes, and stay compliant without unnecessary complications.

From uncertain status to structured enforcement

In the early 2010s, crypto in the UK existed in a regulatory grey zone. Bitcoin was seen as experimental, exchanges weren’t supervised and most tax professionals had no clear answers.

That changed in 2018 when HMRC released its first guidance on cryptoassets. The document didn’t introduce new rules, but clarified how existing tax laws apply to crypto-related transactions. The key message was simple: crypto isn’t exempt from taxation just because it’s new. Since then, HMRC has expanded its guidance and aligned it with international standards from the OECD and FATF.

Platforms like Binance and Coinbase began tightening user compliance in 2024, and the UK is expected to adopt the CARF reporting framework in the near future.

Today, even simple transactions - like swapping tokens, withdrawing to fiat, or using crypto for purchases - can trigger a tax liability. And you’re expected to provide full documentation. If you can’t show when you acquired your crypto, or at what value, HMRC can apply backdated taxation with penalties of up to 100%. What matters now is having clear records and traceability.

How HMRC categorises your crypto activity

HMRC doesn’t treat crypto as money. As said before, it classifies it as property and taxes it based on how you use it. Depending on the nature of each transaction, your crypto may be taxed as a capital gain or as income. Understanding which rule applies is key to reporting correctly.

Capital Gains/Losses: when you dispose of crypto

Most taxable events fall under Capital Gains Tax. If you sell crypto for fiat, swap it for another token, spend it on goods or services, or gift it to someone other than your spouse, HMRC considers it a disposal. The gain is the difference between what you paid (including fees) and the value of the asset at the time of disposal, converted into GBP, even if no fiat is involved.

Swapping tokens, paying with crypto, or moving assets out of your portfolio can all generate a reportable gain. You’re expected to keep records of the original acquisition cost, disposal date, and GBP equivalent.

Income: when you earn crypto

Some transactions generate income rather than capital gains. This includes rewards from staking, mining, airdrops linked to an action, or any crypto received as payment for a job or service. In these cases, the value of the crypto at the time you receive it is added to your other income and taxed at your marginal rate (20%, 40%, or 45% in 2025).

The classification depends on context:

• staking rewards and referral bonuses are usually treated as miscellaneous income;

• mining may be treated as self-employment if it is frequent and organised;

• airdrops are taxed as income only if received in exchange for an action or as part of an ongoing activity. If received passively, they may be treated as capital and taxed only when sold.

Later, when you dispose of crypto you earned, CGT may apply on any further gain since receipt.

Income affects the Capital Gains Tax (CGT)

HMRC determines your Capital Gains Tax rate based on the combined amount of taxable income and taxable gains.

The rules below apply to the 2024/25 tax year. Different allowances and rates applied in previous years.

• Subtract the personal allowance (£12,570 for 2024/25) from your income to find your taxable income

• Subtract the CGT annual exemption (£3,000) from your capital gains

• Add these two figures together

If the combined total stays within £50,270, gains are taxed at 18% (basic-rate). Any amount above this threshold is taxed at 24% (higher-rate).

For disposals made on or after 30 October 2024, the new CGT rates of 18% and 24% apply. Disposals before this date use the old rates of 10% and 20%. You must split disposals by date when completing your Self Assessment and complete Box 51 to reflect the new rates, as HMRC’s calculator still defaults to the old ones.

Allowances and reporting thresholds (2024/25 rules)

The CGT annual exemption is £3,000 for 2024/25. If your net gains from crypto exceed this amount, you must include them in your Self Assessment and pay CGT on the excess.

Failing to report when required can still result in HMRC penalties.

How HMRC treats common crypto activities

HMRC doesn’t apply a one-size-fits-all rule. Each crypto transaction is assessed based on what actually happens, not just how it’s labelled. Below are the most common activities and how they’re taxed.

Holding crypto

Simply holding crypto isn’t a taxable event. You only pay tax when you dispose of the asset. Still, you’re expected to maintain full records: when and how you acquired the tokens, what you paid (in GBP), the wallet address, and the platform used. This information will be essential when you eventually sell or swap the asset.

Swapping one token for another

Swapping one crypto asset for another counts as a disposal. Even if no fiat currency is involved, you must calculate a capital gain based on the market value (in GBP) of the token you received. This applies to trades on both centralised and decentralised exchanges, as well as token migrations and bridge transfers.

Spending crypto

Using crypto to buy goods or services is treated as a disposal. Whether you pay with Bitcoin for a coffee or use ETH to buy an NFT, it’s a taxable disposal. The gain is the difference between your original acquisition cost and the value of what you received, converted to GBP at the time of the transaction.

Staking

Rewards from staking are usually taxed as income when received, based on their market value in GBP on that date. This applies whether the staking is done via an exchange or directly onchain. If you later sell, swap, or spend the reward tokens, Capital Gains Tax may apply on any increase in value since the date you received them.

In rare cases, for example, if staking is frequent, organised, and conducted with a profit-making intention, HMRC may treat it as self-employment.

Lending and DeFi yields

Lending rewards and other DeFi yields (such as liquidity pool rewards, yield farming or earnings from protocol participation) follow a similar logic.

• If the return is fixed, predictable or has the characteristics of interest, it is likely to be taxed as income when received;

• if the reward has no clear market value at the time of receipt, it may instead be taxed only when disposed of (sold, swapped, or spent).

Any subsequent disposal of DeFi reward tokens will also trigger CGT on any gain since receipt.

Airdrops

Tax treatment of airdrops depends on how you received them. If you perform an action, such as signing up, tweeting or holding a specific token, the value is usually taxed as income. If you received them without any condition, HMRC may still treat them as income if your overall activity suggests professional trading. Regardless of the classification at receipt, any later disposal is subject to CGT.

NFTs

Selling, swapping, or gifting an NFT is considered a disposal and may trigger Capital Gains Tax. If you earn NFTs through play-to-earn games, yield farming, or staking programmes, their value is usually taxed as income at the time of receipt. Moving NFTs into or out of liquidity pools can also result in a disposal, depending on how the protocol works. Airdrops of NFTs are treated in the same way as other airdrops: if you did something to receive them, they’re taxed as income.

Mining

If you mine crypto occasionally and you are an individual, the value of the rewards is taxed as miscellaneous income. If the mining is frequent or capital-intensive, HMRC may treat it as a business, subject to self-employment rules and National Insurance. Any future disposal of the mined tokens will also trigger CGT, based on the value increase since receipt.

How to calculate your crypto gains

When you dispose of crypto by selling, swapping, or spending you need to calculate the gain in pounds sterling. That means converting both the acquisition cost and the disposal value using the spot rate on the day of each transaction. HMRC requires this even if the transaction didn’t involve any fiat.

You can deduct certain costs: the price you paid to acquire the tokens, any transaction fees (including exchange or network fees directly tied to the purchase or disposal), and other direct costs tied to the disposal. Transaction fees on acquisition increase your cost basis; fees on disposal reduce your disposal proceeds. You can’t deduct general expenses like electricity or internet, unless the activity is part of a registered business.

Unlike in some other countries, you don’t get to choose which tokens you sold. The UK uses a specific set of matching rules to determine which units are disposed of, and in what order. These rules apply automatically, and they follow a strict hierarchy.

• Same-day rule: if you buy and sell tokens of the same kind on the same day, those transactions are matched first.

• 30-day rule (“bed and breakfast”): if you buy more tokens within 30 days after a sale, those purchases are matched to that sale next.

• Section 104 pool: all remaining tokens are grouped into a running average cost pool for that asset. Each cryptoasset has its own pool, so you must track them separately (e.g., one pool for ETH, one for BTC).

Declaring your crypto with HMRC

Crypto gains and income aren’t reported automatically. You must declare them through the Self Assessment system, using the correct forms and sections depending on the type of activity. Capital gains go on the SA108 form, where you list disposals, calculate gains, and apply the correct tax rates.

Crypto income such as staking rewards, referral bonuses, or airdrops linked to an action is usually reported in box 17 of the SA100, under “other income”.

If you’ve lost access to crypto due to a lost key, scam, or broken contract, and you want to claim a capital loss, you can submit a negligible value claim. This can be included in your tax return or sent separately to HMRC with evidence of the loss.

For the 2024/25 tax year (covering activity from 6 April 2024 to 5 April 2025), the key deadlines are:

• 31 October 2025: submit a paper tax return;

• by 31 January 2026: submit your online tax return and pay any tax due.

Penalties for non-compliance (2024/25 rules)

If you miss a deadline, under-report gains, or fail to pay tax on time, HMRC can apply penalties and interest. These rules apply whether your crypto activity is frequent or occasional, and regardless of the platform or wallet used.

Note on interest: unless stated otherwise, interest is charged daily on any unpaid tax for all the following penalty types. The current rate is about 6.5% per year (Bank of England base rate 4% + 2.5%)

Failure to notify

You had taxable crypto income or gains but did not submit the required forms SA100 or SA108.

• Penalty percentage of the unpaid tax:

• Careless: 0–30%

• Deliberate (not concealed): 20–70%

• Deliberate and concealed: 30–100%

The penalty will be reduced if you disclose before HMRC contacts you.

From 1 January 2026, the crypto asset category will also include failure to provide the required personal and tax details to UK-based crypto service providers under CARF. This can trigger an additional administrative fine of up to £300.

Inaccuracy in a submitted return

You filed your Self Assessment, but omitted or understated taxable crypto income or gains.

Penalty percentage of the additional tax owed:

• Careless: 0–30%

• Deliberate (not concealed): 20–70%

• Deliberate and concealed: 30–100%

The penalty will be reduced if you correct the return before HMRC contacts you.

Late payment

You filed your return correctly, but did not pay the tax by the deadline of the 31st of January.

Interest: charged daily on the unpaid tax (~6.5% per year), as per the above note.

Penalties:

• 5% of the unpaid tax after 30 days

• +5% after 6 months

• +5% after 12 months

The 5% penalties apply to the balance still unpaid at each date. A Time to Pay arrangement can usually prevent these, but interest will still accrue.

Criminal offences

Reserved for the most serious and deliberate cases of crypto tax evasion, involving concealment or fraud. HMRC can pursue criminal prosecution, leading to unlimited fines and prison sentences, in addition to the tax, interest, and civil penalties.

From rules to action: your crypto taxes, handled with CryptoBooks

After covering the main rules, allowances, and reporting steps, here’s the bottom line: in the UK, crypto taxation is well defined. Every disposal, staking reward, swap, or payment can trigger tax, regardless of the wallet, exchange, or network involved. The key is being able to track every transaction, apply the right rules, and report on time.

If your crypto activity spans multiple platforms or chains, the administrative burden increases fast. HMRC expects a full report with traceable gains, correctly valued income, and supporting records for every figure declared.

CryptoBooks helps you manage that complexity. Create a free account, connect all your wallets, exchanges, and platforms, and review your full transaction history. You can then decide if and when to upgrade to a paid plan to generate ready-to-file tax reports, with no upfront commitment.

More than a reporting tool, CryptoBooks gives you the visibility and control to make informed tax decisions:

• track your real-time tax exposure across all assets, wallets, and platforms;

• estimate your tax bill before year-end and adjust your positions if needed;

• simulate disposals to evaluate their fiscal impact before acting;

• detect missed or misclassified transactions that could lead to penalties;

• split income from gains, calculate cost basis under HMRC rules, and apply allowances correctly;

• generate ready-to-file Self Assessment reports: SA108 for capital gains, SA100 for income;

• keep a compliant audit trail in case HMRC requests documentation, even years later.

Whether you’re preparing for 31 January, reviewing last year’s activity, or planning ahead, CryptoBooks gives you a single space to stay in control of your crypto taxes. Get compliant and keep every crypto transaction under control with CryptoBooks!