How Crypto is Taxed in the UK
When CGT is Triggered
- Selling crypto for fiat (GBP, USD, EUR)
- Swapping one crypto for another (crypto-to-crypto)
- Spending crypto on goods/services
- Gifting crypto to someone other than a spouse/civil partner
NOT taxed as CGT: Mining/staking income, airdrops, and crypto received as salary are taxed as income tax, not CGT.
HMRC Section 104 Pool Rule
When you buy the same cryptocurrency multiple times, HMRC requires you to pool all your holdings of that asset together (the 'section 104 pool'). Your cost basis is the average price across all purchases. Special rules: same-day rule and bed-and-breakfast rule (30-day rule) prevent simple tax avoidance.
30-Day Rule (Bed and Breakfast)
If you sell crypto and buy the same asset back within 30 days, the repurchase cost (not the pool) is matched against the disposal. This prevents selling at a loss to crystallise a CGT loss and immediately buying back.
CGT Rates 2025/26
| Taxpayer | CGT rate on crypto |
|---|
| Basic rate (income up to £50,270) | 18% |
| Higher / additional rate | 24% |
Annual Exempt Amount
The first £3,000 of net capital gains in 2025/26 is tax-free. Report on Self Assessment if total gains exceed £3,000 or total disposals exceed £50,000.
Frequently Asked Questions
Does HMRC know about my crypto?
HMRC has received data from UK crypto exchanges (including Coinbase, Binance.UK) and uses powers under Finance Act 2011 to require platforms to provide user transaction data. HMRC actively pursues crypto tax compliance and has sent 'nudge letters' to known holders.
Is crypto-to-crypto a taxable event?
Yes. Under HMRC rules, swapping Bitcoin for Ethereum (or any other crypto exchange) is a disposal of the first asset and an acquisition of the second. You calculate a gain/loss based on the sterling value at the time of the swap.
What is the section 104 pool?
The section 104 pool groups all purchases of the same cryptocurrency into one pool with an average cost basis. When you sell, you calculate the gain using the pool's average price — not the price of specific coins. Exception: same-day purchases and purchases within 30 days of a sale are matched first.
What if I lost money on crypto?
Crypto losses can be offset against gains from other assets in the same year. Remaining losses carry forward indefinitely against future capital gains. Losses must be reported to HMRC even if no tax is due. Report on Self Assessment.
Is staking income taxed as income or capital gains?
HMRC treats staking rewards as miscellaneous income at the value of tokens received (in GBP at the time). Income tax is due. When you later sell the staked tokens, CGT applies on any gain above the income value you already declared. Mining income is also taxed as income.
What records do I need for crypto tax?
HMRC requires: date of each acquisition and disposal, type of cryptocurrency, number of units, value in GBP at time of transaction, acquisition cost, fees paid, and description of the transaction. Many crypto tax software tools (Koinly, CoinTracker, TaxBit) can generate HMRC-compatible reports.
Do I need to report crypto on Self Assessment?
Yes if: your total gains exceed £3,000 in the tax year OR your total disposals exceed £50,000 (even if within the annual exempt amount). You must also report if you already complete Self Assessment for other reasons. Failure to report can result in penalties and interest.
Can I put crypto in an ISA to avoid CGT?
No. UK ISAs cannot hold cryptocurrency directly. Some investment products track crypto indirectly (e.g., Bitcoin ETPs or ETFs) — these can be held in an ISA. The underlying crypto itself cannot be held in an ISA.