Cryptocurrency Tax UK 2025: Complete HMRC Guide

How HMRC Treats Cryptocurrency

HMRC does not treat cryptocurrency as currency or money. Instead, HMRC classifies crypto-assets as a form of intangible capital asset. This has significant tax implications: just as you pay CGT when you sell shares or investment property, you pay CGT when you dispose of cryptocurrency.

HMRC published its Cryptoassets Manual (an official detailed guidance document) which covers Bitcoin, Ethereum, tokens, NFTs, staking, DeFi, and yield farming. The key principle is: “You need to pay tax on profits you make from cryptoassets, just like other capital gains or income.”

Crypto Capital Gains Tax Rates 2025/26

Cryptocurrency is treated as a non-residential capital asset for CGT purposes. The rates that apply from 30 October 2024 (Autumn Budget) are:

What Counts as a Taxable Crypto Event?

HMRC defines a “disposal” broadly. You have a taxable event (and must calculate a gain or loss) whenever:

• Selling crypto for pounds or another fiat currency (e.g., selling Bitcoin for GBP on an exchange)
• Exchanging one crypto for another (e.g., swapping ETH for SOL — this is a disposal of ETH at market value)
• Using crypto to buy goods or services (e.g., paying for a product with Bitcoin)
• Gifting crypto to anyone other than your spouse or civil partner
• Donating crypto to charity (note: Gift Aid rules apply, may reduce income tax)

NOT a taxable event:

• Buying crypto with GBP (not a disposal)
• Transferring crypto between your own wallets
• Gifting crypto to your spouse or civil partner
• Holding crypto (unrealised gains are not taxed)

HMRC Share Pooling Rules for Crypto

Because many investors buy the same cryptocurrency multiple times at different prices, HMRC uses share pooling (also called “section 104 pooling”) to calculate your average cost basis. This prevents you from cherry-picking the highest-cost coins to minimise gains.

How Share Pooling Works

All purchases of the same type of cryptocurrency are pooled together. The pool has a running total of:

• The total number of coins/tokens held
• The total allowable cost paid for all of them (the “pool cost”)

When you sell, the cost you can deduct is: (number sold ÷ total in pool) × pool cost.

The Same-Day Rule and 30-Day Rule

Two special rules take priority over standard share pooling to prevent tax avoidance:

Same-Day Rule

If you buy and sell the same type of crypto on the same day, the acquisition cost used is the price paid that day, not the pool average. This prevents end-of-day tax-loss harvesting where you sell at a loss and buy back immediately.

30-Day Rule (Bed and Breakfasting)

If you sell crypto and buy the same type within 30 days, the cost used is the repurchase price, not the pool average. This rule prevents you from selling crypto to crystallise a loss, then buying back to reset your cost basis while staying invested.

Income Tax on Crypto: Staking, Mining, and Airdrops

Not all crypto receipts are subject to CGT. When you receive crypto as a form of income, income tax applies instead. The relevant activities include:

When income-taxed crypto is later sold, CGT also applies on any further gain from the value at the time you received it. This is a “dual tax” situation: income tax on receipt, CGT on disposal growth.

Reporting Crypto to HMRC: Self Assessment

You must file a Self Assessment tax return and declare crypto gains/income if:

• Your total gains from all disposals in the year exceeded £50,000
• Your net gains (after losses) exceeded £3,000 (the annual exempt amount)
• You received crypto income (staking, mining, airdrops) worth more than £1,000
• You want to declare crypto losses to carry forward against future gains

Record Keeping Requirements

HMRC requires you to keep detailed records of every crypto transaction, including:

• Date of acquisition and disposal
• Sterling value of crypto at time of each transaction (use a reputable price source like CoinGecko or CoinMarketCap)
• The number of units acquired and disposed of
• Cumulative pool totals after each transaction
• Any exchange fees paid (these are allowable costs)
• Wallet addresses involved

Records must be kept for at least 5 years after the Self Assessment filing deadline for the relevant year. With crypto, HMRC recommends keeping records indefinitely as blockchain transactions are immutable.

Crypto Losses: How to Use Them

Crypto losses are valuable. If you sell crypto at a loss, you can:

• Offset against other CGT gains in the same tax year, potentially reducing your CGT bill to zero
• Carry forward unused losses to offset gains in future years (losses never expire)
• Claim losses on worthless tokens — HMRC allows you to make a negligible value claim if a token has effectively become worthless (e.g., exchange collapse, rug pull)

HMRC Data Sharing and Offshore Exchanges

A common misconception is that using an overseas exchange means HMRC cannot track your crypto. This is incorrect.

HMRC has multiple avenues for obtaining data:

• UK exchange data requests: HMRC has compelled UK-registered exchanges (Coinbase UK, Kraken, Binance UK) to provide customer data including identity, transaction history, and balances
• Common Reporting Standard (CRS): 120+ countries automatically exchange financial account information annually. Major crypto exchanges in participating countries report UK-resident holders
• OECD Crypto-Asset Reporting Framework (CARF): From 2027, CARF requires exchanges in 50+ jurisdictions to automatically report crypto holders' details and transactions to their home tax authority
• Blockchain analytics: HMRC uses firms like Chainalysis to trace on-chain transactions back to individuals through KYC-verified exchange accounts

The clear message from HMRC: undeclared crypto gains will be found. Voluntary disclosure (contacting HMRC proactively) results in significantly lower penalties than being caught.