- Since January 2026 your exchange has been collecting your name, address and National Insurance number, and it reports your holdings and transactions to HMRC. Refusing to provide details carries a £300 penalty. Assume HMRC knows.
- Swapping one coin for another is a taxable disposal. “I never cashed out to pounds” is the most expensive misunderstanding in UK crypto.
- You get £3,000 of gains tax-free each year; above that you pay 18% or 24%. Moving coins between your own wallets is not taxed at all.
For most of crypto’s history, UK tax on it worked on the honour system: HMRC published rules, and hoped. That era is over. In the year to April 2025 HMRC sent about 65,000 “nudge” letters to people it suspected of underdeclaring crypto, and since 1 January 2026 UK exchanges have been legally required to collect and verify their customers’ identities and report their transactions to HMRC directly. The honour system has been replaced by a data feed.
The rules themselves are not actually complicated: they are just different from what most people assume, and the assumptions are where the tax bills come from. This page sets out the whole picture in plain English: what triggers tax, how much, the reporting rules, and what to do about losses, lost coins and undeclared past years. Everything here was checked against HMRC’s cryptoasset manual and gov.uk in August 2026. It is education, not advice; if your situation is messy, an hour with a crypto-literate accountant is cheap compared with getting it wrong.
When you owe tax and when you don’t
Capital gains tax is charged when you dispose of crypto, and HMRC’s definition of disposal is wider than most people’s. The full map:
| What you did | Tax? | Worth knowing |
|---|---|---|
| Bought and held | No | Buying crypto with pounds is never a taxable event, however much it grows on paper. |
| Moved coins between your own wallets | No | Exchange to hardware wallet, wallet to wallet: not a disposal. (A transaction fee paid in crypto can technically be a tiny disposal of the fee itself.) |
| Sold for pounds | CGT | The obvious one. |
| Swapped coin for coin | CGT | Bitcoin to ether is a disposal of the bitcoin at that day’s value. This is the rule that catches active traders who “never cashed out”. |
| Spent crypto on anything | CGT | Paying for a laptop in bitcoin is a disposal of the bitcoin. |
| Gave coins away | CGT | A gift is a disposal at market value: tax can be due on money you never received. |
| Gave coins to your spouse or civil partner | No | No gain, no loss: they inherit your original cost. Useful: it doubles up allowances (see below). |
| Earned staking or rewards | Income tax | Taxed as income at the value on the day you received them, and again under CGT when you later dispose of them. |
| Got paid in crypto | Income tax + NI | Wages are wages whatever they’re paid in; for mainstream coins your employer should run it through payroll. |
| Received a random | No (on receipt) | Unsolicited airdrops with nothing done in return aren’t income, but CGT applies when you sell. Airdrops you did something for are income. |
The pattern: pounds in, no tax; value out, in any form, tax. Full detail is in HMRC’s own manual.
How much tax you pay
Everyone gets an annual capital gains allowance of £3,000: the first £3,000 of gains each tax year is free. (It was £12,300 as recently as 2023; it is not coming back.) Above that, crypto gains are taxed at 18% or 24%, and which rate you pay depends on your income: gains stack on top of your income, and whatever fits inside the basic-rate band is taxed at 18%, the rest at 24%.
A worked example. You earn £30,000 and make a £10,000 gain selling bitcoin. Knock off the £3,000 allowance, leaving £7,000 taxable. Your salary uses up £17,430 of the £37,700 basic-rate band, leaving plenty of headroom, so the whole £7,000 is taxed at 18%: a bill of £1,260. A higher earner making the same gain would pay 24%: £1,680.
Two legitimate ways to shrink the bill. Gains and losses in the same year offset each other automatically, and unused losses carry forward forever, but only if you claim them (more below). And transfers between spouses are tax-free, so a couple can use both £3,000 allowances and both sets of basic-rate headroom by moving coins to whichever partner pays less. What you cannot do is sell at a loss and immediately buy back: the 30-day rule matches your sale against anything you rebuy within 30 days, cancelling the artificial loss.
One more thing most people have never heard of: your cost basis is pooled. HMRC treats all your bitcoin as one pool with one average cost: you cannot pick which “lot” you sold to flatter the numbers. Every disposal uses the pool’s weighted average. This is why crypto tax software exists, and why keeping your own transaction exports matters.
Whether you actually need software depends on how much you have traded. A handful of buys and a single sale, and a spreadsheet will do it. A few hundred transactions across three exchanges and the pooling maths stops being something you want to do by hand, because every disposal needs the pool’s weighted average as it stood on that day, recalculated after every purchase you made in between. Tools like Koinly import the exchange history and produce the figures in the shape Self Assessment asks for; we look at it properly in our Koinly review.
Two things worth saying plainly before you pay for one. None of these tools are HMRC-approved, and the numbers are only ever as good as the exports you feed them: a missing transfer between your own wallets can turn into a phantom disposal and inflate your bill. Whatever the software says, you are the one filing it.
Imports your exchange history and produces the capital gains figures in the shape HMRC asks for.
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Staking, mining and DeFi
Rewards are income at the sterling value on the day they arrive, not when you sell them. There is a £1,000 annual allowance for miscellaneous and trading income which quietly covers small-scale staking: if all such income totals under £1,000 in the year, there is nothing to pay and nothing to report. Above it, the income goes on your return, and the coins then sit in your CGT pool at their arrival value for whenever you sell.
carries a genuine trap under current rules: depositing into a lending platform or liquidity pool can itself count as a disposal (taxable) because ownership technically changes hands, even though it doesn’t feel like selling. The government has accepted this is absurd and has published draft legislation to fix it, but the fix is not planned to arrive before April 2027, so the trap is live today. If you use DeFi with meaningful money, this is the single best reason on this page to pay an accountant.
Your exchange now reports you
This is the part that has genuinely changed the game, and most holders still haven’t heard of it. Under the international Crypto-Asset Reporting Framework, from 1 January 2026 UK crypto platforms (exchanges, wallet apps, marketplaces) must collect and verify each customer’s name, date of birth, home address and National Insurance number, plus a record of their transactions: values, asset types, units. The first reports reach HMRC between January and May 2027, covering everything you did in 2026. The UK wrote itself an extension, too: British platforms report their British customers straight to HMRC, not just foreign ones. Refuse to give your exchange the details and the law fines you, up to £300, and the exchange will generally just freeze you out anyway.
HMRC expects this to bring in around £315m by 2030, and its behaviour has already changed: tens of thousands of nudge letters, settlements running at tens of thousands of pounds each, and this year, letters to accountants reminding them crypto belongs on inheritance tax returns as well. The practical conclusion is simple: file as if HMRC can see your exchange history, because from this year, it can.
Reporting and deadlines
Crypto gains go through Self Assessment, which since the 2024-25 return has had a dedicated cryptoassets section: your gains are itemised, not buried in “other assets”. For the tax year that ended in April 2026: register for Self Assessment by 5 October 2026 if you’re not already in it, and file and pay by 31 January 2027. Missing the filing date costs £100 immediately, then escalates.
You need to report if your gains beat the £3,000 allowance, or if you owe tax on crypto income; and, a rule that surprises people, if you’re already in Self Assessment and your total proceeds from disposals topped £50,000, even at a loss. If you only owe a bit of CGT and aren’t otherwise in Self Assessment, gov.uk’s real-time CGT service lets you report a gain without joining the whole Self Assessment machine.
Keep records as if you’ll be asked, because increasingly you will be: dates, amounts, sterling values, what was swapped for what, wallet addresses, and exports from every exchange you use: platforms close, and their data goes with them.
Losses, lost coins and scams
Losses are valuable (they offset gains pound for pound and carry forward indefinitely), but they are not automatic. A loss must be claimed, normally on your return, within four years of the end of the tax year it happened in. Anyone who got wrecked in a past crash and never filed anything is sitting on unclaimed losses with a clock running.
Coins that became genuinely worthless can be written off through a negligible value claim, which crystallises the loss without a sale. Lost your keys? Harder: HMRC’s position is that the coins still exist, so losing access is not a disposal; a claim is only possible if you can show there is no realistic prospect of ever recovering them. Scam victims are in the most nuanced spot of all: some situations support a loss claim and some don’t, and this is genuinely one for professional advice rather than a rule of thumb.
Common questions
My income is under the personal allowance, surely I don’t pay tax on gains?
You still can. Income tax and capital gains tax have separate allowances: low income just means more of your gain fits in the 18% band instead of 24%. The only number that makes crypto gains tax-free is the £3,000 CGT allowance.
Can I hold crypto in an ISA or my pension?
Not coins directly, and the door that briefly opened has mostly closed again. Crypto exchange-traded notes became available to UK retail investors in October 2025 and could go in a stocks and shares ISA, but since April 2026 new purchases only qualify inside an Innovative Finance ISA, which almost no mainstream platform offers for them. Some pension schemes permit the ETNs, scheme rules allowing. For most people, practically speaking: no.
I haven’t declared anything for years. What now?
Come forward before the CARF data lands. HMRC runs a dedicated cryptoasset disclosure facility, and penalties are meaningfully lower when a disclosure is unprompted, a category you fall out of the moment HMRC writes to you first. With exchange data flowing from next year, the window for “unprompted” is closing. An accountant can run the disclosure for you.
Does HMRC really tax money I never received, like swaps and gifts?
Yes. The disposal rules tax the value you realised, not the cash you banked: swap bitcoin for ether at a profit and the profit is real in HMRC’s eyes, even though your pounds balance never moved. It feels unfair; it is also exactly how shares and property work, and it is not going to change. Budget for tax when you swap, not just when you sell.
Checked against HMRC’s cryptoassets manual, gov.uk and current legislation in August 2026; tax years and figures are for 2026-27 unless stated. This page is reviewed on a schedule and updated when the rules change, and they are changing: watch the rules in 2027. It is education, not tax advice. There are no affiliate links on this page; if that ever changes it will be disclosed here, in line with our affiliate disclosure and editorial policy.