Crypto Tax in the United Kingdom: Complete 2026 Guide

How is Crypto Taxed in the United Kingdom?

His Majesty\'s Revenue and Customs (HMRC) treats cryptocurrency as a chargeable asset for Capital Gains Tax purposes, much like shares or other investments. For most individual investors, disposals of crypto trigger Capital Gains Tax (CGT) on the gain above the annual exempt amount. Crypto received as income — from employment, mining, staking, certain airdrops — is subject to Income Tax instead.

HMRC publishes detailed guidance in the Cryptoassets Manual, originally released in 2018 and significantly expanded in 2022 (covering DeFi) and 2024. The manual treats most personal crypto activity as investment rather than trade, but the "badges of trade" test can shift activity into the Income Tax net at higher volumes. For most retail investors the CGT regime applies; for active day-traders, professional miners, and DeFi yield-farm operators the Income Tax regime may apply.

The October 2024 budget produced two consequential changes: CGT rates rose from 10%/20% to 18%/24% for disposals made on or after 30 October 2024, aligning crypto with the existing residential-property CGT rates. The annual exempt amount remained at £3,000 (down from £6,000 the prior year and £12,300 before that). The combination has materially increased the UK tax burden on crypto investors compared to a few years ago.

UK Crypto Capital Gains Tax Rates

For disposals on or after 30 October 2024 (which covers the entire 2025/26 tax year):

• Basic rate taxpayers (income up to £50,270) pay 18% on crypto gains within their basic-rate band.
• Higher and additional rate taxpayers (income above £50,270) pay 24% on crypto gains above the basic-rate band.
• The £3,000 annual exempt amount applies first; only net gains above this are taxed.

If your income plus gains straddle the basic-rate band, part of your gain may be taxed at 18% and part at 24%. The calculation: total income first (used to determine where the basic-rate threshold sits relative to your gains), then gains taxed at applicable rates.

Worked Example

Alice has £40,000 salary and £15,000 of crypto gains in 2025/26. Her CGT calculation:

• Income: £40,000 (within basic-rate band; £10,270 of basic-rate band remaining).
• Crypto gains: £15,000 minus £3,000 exempt = £12,000 taxable.
• £10,270 taxed at 18% = £1,848.60
• £1,730 taxed at 24% = £415.20
• Total CGT: £2,263.80

Which UK Crypto Transactions are Taxable?

• ✅ Selling crypto for GBP or any fiat currency — CGT disposal.
• ✅ Swapping one crypto for another — CGT disposal of the asset given up.
• ✅ Spending crypto on goods or services — CGT disposal at fair market value.
• ✅ Gifting crypto to anyone other than your spouse / civil partner — CGT disposal at market value at gift.
• ✅ Receiving crypto as employment income — Income Tax + National Insurance at fair market value.
• ✅ Mining (commercial) — Income Tax + potentially National Insurance; pooled for later CGT.
• ✅ Mining (hobby) — Income Tax as miscellaneous income; pooled for later CGT.
• ✅ Staking rewards — Income Tax as miscellaneous income at fair market value when received.
• ✅ Airdrops received in return for action (promotion, social media) — Income Tax at receipt.
• ❌ Buying crypto with GBP — not taxable; establishes pooled cost basis.
• ❌ Holding crypto — no taxable event.
• ❌ Transferring between your own wallets — no disposal.
• ❌ Gifting to spouse / civil partner — no disposal; basis transfers.
• ❌ Donating to a UK registered charity — no disposal at the value of donation.
• ❓ Airdrops received without action — generally not Income Tax but later CGT disposal.

Tax-Free UK Crypto Activities

Several activities sit outside HMRC\'s tax net:

• The £3,000 annual exempt amount — first £3,000 of net gains each tax year.
• Inter-spousal transfers — no CGT on transfers between spouses or civil partners; receiving spouse takes on the giver\'s base cost.
• Charitable donations of crypto — donating to a UK registered charity is not a CGT disposal; Gift Aid may apply for higher-rate relief.
• Holding crypto in an ISA or SIPP — not currently possible (no FCA-recognised crypto ISA/SIPP exists), but a possible future development.
• Passive airdrops received without action — not Income Tax at receipt; only CGT on subsequent disposal (with £0 base cost unless allocation can be evidenced).

How to Report Crypto to HMRC

1. Determine if you need to file Self Assessment. You need to file if you have gains above the £3,000 annual exempt amount, total disposals proceeds above £50,000, or any crypto income. Even without these, voluntary filing may simplify position.
2. Register for Self Assessment by 5 October following the tax year of your first reportable activity.
3. Compile your transaction history. Download CSVs from every exchange, wallet, and DeFi protocol. Reconcile transfers between platforms.
4. Calculate gains under share pooling (Section 104). Group same-token holdings into a Section 104 pool with weighted-average cost basis. Apply the same-day and 30-day rules for same-token purchases shortly before and after a disposal.
5. Complete the Capital Gains Tax pages of Self Assessment (SA108). Report total proceeds, total allowable costs, and total gains. Crypto has a dedicated SA108 section.
6. Report any Income Tax on crypto. Mining, staking, airdrops with action, and crypto wages go on the main return (SA100) or relevant supplementary pages.
7. File by 31 January following the tax year. Pay any tax due by the same date. Payments on account may be required.

HMRC offers a separate Cryptoasset Disclosure Facility for historical undeclared gains — voluntary disclosure typically attracts lower penalties than discovery.

Crypto Tax for Specific Activities

Staking Rewards

HMRC treats most staking rewards as miscellaneous income at fair market value when received. The £1,000 trading allowance (CRYPTO22150) can shelter small staking income for some taxpayers. When you later dispose of staked tokens, the income amount becomes the cost basis for CGT.

Mining Income

Commercial mining is treated as a trade — profits are Income Tax (and Class 4 National Insurance) at marginal rates. Hobby mining is miscellaneous income. Equipment and electricity costs may be deductible against mining income.

DeFi (Lending, Liquidity Pools)

HMRC\'s DeFi guidance (February 2022, updated 2024) treats most DeFi lending and liquidity provision as a disposal of the asset deposited (with the receipt token a new asset). This produces immediate CGT on entry to a DeFi position. The UK government consulted on simpler treatment in 2024–25; reform may come but is not yet enacted.

NFTs

NFTs follow the same CGT regime as fungible crypto. There is no separate "collectibles" rate as in the US. Spend or sale of an NFT creates a CGT disposal.

Crypto Salary

Wages paid in cryptocurrency are taxed as employment income at fair market value at payment, subject to Income Tax and NICs through PAYE. The receipt becomes the CGT base cost for future disposals.

Share Pooling Rules (Section 104)

UK CGT applies share pooling under Section 104 of the Taxation of Chargeable Gains Act 1992 to crypto holdings. All units of the same token form a single pool with a weighted-average cost basis. Three matching rules apply to disposals:

1. Same-day rule — units acquired on the same day as a disposal are matched first.
2. "Bed and breakfasting" / 30-day rule — units acquired in the 30 days after a disposal are matched before the Section 104 pool, preventing wash-sale tax-loss harvesting.
3. Section 104 pool — remaining disposals are matched against the pool at weighted-average cost.

Different tokens (BTC vs ETH) form separate pools. Identical tokens on different chains (e.g. ETH and WETH; native USDC vs USDC on multiple chains) generally form separate pools per HMRC guidance, though boundaries can be ambiguous.

Best UK Crypto Tax Software

Official Sources & References