A lot of people think crypto tax only kicks in when you turn it back into pounds in your bank account. That’s not true, and it’s one of the most common (and costly) mistakes out there. If you buy, sell, swap, or earn crypto in the UK, HMRC has rules for it — and those rules are only getting stricter. Here’s the simple version of what you need to know.
Quick note: this is a beginner’s guide, not personal tax advice. Your own situation might be different, so for anything beyond the basics, talk to an accountant.
Crypto Counts As An Asset, Not Cash
HMRC treats crypto more like a share or a house than like money. That means most times you “get rid of” crypto, it can count as a taxable event — not just when you sell it for pounds. This also includes:
- Swapping one crypto for another (even swapping one stablecoin for another)
- Spending crypto to buy something
- Gifting crypto to anyone except your spouse or civil partner
Plenty of people assume that because they never touched their UK bank account, HMRC won’t notice. That’s a risky assumption, and it’s getting riskier (more on that below).
The Two Types Of Crypto Tax
Capital Gains Tax (CGT) applies when you sell or swap crypto for a profit. Right now, you can make £3,000 in gains per year before you owe anything. Above that, you pay 18% if you’re a basic-rate taxpayer, or 24% if you’re a higher-rate taxpayer.
Income Tax applies when you earn crypto rather than trade it — for example, staking rewards, mining rewards, or some airdrops. These are taxed as income at the moment you receive them, based on their value in pounds at that time. If you later sell those coins, that’s a separate CGT event on top.
One tip: if you lose money on crypto, report the loss to HMRC even if you have no gains to offset it against that year. You can carry it forward to use later — but only if it’s on record.
Working Out Your Cost (The Tricky Bit)
If you’ve bought the same coin at different prices over time, you can’t just pick which purchase you’re “selling.” HMRC has a set order: first it matches sales against anything you bought that same day, then anything bought in the following 30 days, and anything left over gets averaged together into one running cost for that coin. It sounds fiddly because it is — this is exactly why keeping records as you go matters so much.
What To Actually Keep Track Of
For every transaction, note down: the coin, the date, what type of transaction it was (buy, sell, swap, staking reward, etc.), how much, and its value in pounds at the time. Also hold onto bank statements, wallet addresses, and exports from your exchanges — download these regularly, since some exchanges delete old data or shut down entirely.
Why 2026 Changes Things
From 1 January 2026, UK crypto exchanges have to start collecting detailed records on their users and reporting them to HMRC (this is part of a new international standard called CARF). That data reaches HMRC in 2027. In plain terms: the odds of unreported crypto activity going unnoticed are dropping fast. If you’ve got gains or income from previous years you haven’t declared, sorting it out yourself now tends to go a lot better than HMRC finding it first.
The Most Common Mistakes
- Thinking swaps between two cryptos aren’t taxable because no cash was involved
- Forgetting that staking, mining, and some airdrops count as income the moment you receive them
- Not reporting losses, then being unable to use them later
- Guessing values instead of recording the pounds value at the time of each transaction
- Missing the Self Assessment deadline (31 January) because crypto wasn’t on the radar as something to declare
- Assuming an overseas exchange means HMRC can’t see the activity
A Simple Starting Point
Download your transaction history from every exchange and wallet you use, and do it regularly rather than once a year. If you trade often or use DeFi, crypto tax software can save you a lot of manual work. And if your crypto activity has grown beyond casual buying and holding, it’s worth paying an accountant who knows crypto — it usually costs less than getting it wrong.
This post is for general education only and isn’t tax advice. Rules can change and depend on your personal circumstances — speak to a qualified accountant or tax adviser about your own situation.
Written by Niall O’Riordan