Crypto Tax UK: Is There a Capital Gains Tax on Crypto?
Profiting from a great cryptocurrency investment can be an exciting and fulfilling experience – but even during the best of times, investors need to keep their future tax payments in mind. In the UK, crypto-related income may be subject to capital gains tax, and in some instances income tax as well.
In this guide, we’ll take a deeper look at crypto capital gains tax in the UK, and consider crypto income tax factors along the way.
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What Crypto Taxes Are There in the UK?
Crypto tax in the UK can take the form of capital gains tax or income tax. HMRC’s collection of guidance and policy announcements can be found through the UK government’s website. We’ll explain UK crypto tax rates in an easily accessible way throughout this article.
As a general rule, capital gains tax (CGT) applies when an investor profits from an investment of capital (and therefore makes a “capital gain”). Income tax applies when an individual makes an income of some kind (which can take many forms, from wages and salaries to freelancing payments, employment bonuses, etc.), which is a different way of making money.
At the time of writing, technically, there isn’t a dedicated “crypto tax,” “Bitcoin tax,” or other specific cryptocurrency tax in the UK; capital gains tax and income tax are applied instead.
Types of Crypto Taxes in the UK
As mentioned above, when someone in the UK makes money from selling crypto, the money they make can be subject to capital gains tax or income tax. The table below outlines important information about crypto tax in the UK:
| Tax Type | Tax Amount Charged | What Triggers This Tax? | Tax-Free Allowance |
| Capital Gains Tax | 10% – 20% (Increasing to 18% – 24% from April 2025) | Trading or investment profits | £6,000 (Decreasing to £3,000 from April 2025) |
| Income Tax | 0% – 45% | Mining, staking, and airdrop rewards | £1,000 Miscellaneous Income Allowance |
1) Crypto Capital Gains Tax – When Do You Pay It?
In the UK, a new tax year begins on April 6 and continues until April 5 the following year. The deadline for paying UK taxes is January 31 the year after that. So for example, the 2023/2024 tax year began on April 6 2023, and ended on April 5 2024. The tax deadline for that tax year is January 31 2025.
By January 31 each year, UK taxpayers are required to submit a Self Assessment tax return form (to declare the tax they need to pay on taxable income), and pay the required amount of tax to HMRC.
Historically, crypto capital gains tax in the UK has functioned in a similar way to taxation on stocks and shares. Investors who are familiar with more traditional assets will already have some experience in dealing with HMRC, but digital asset tax in the UK can come with its own unique considerations. As cryptoassets generally aren’t recognised as money or currency in the UK (and the government is preparing to introduce new crypto legislation soon), investors will need to remain aware of the latest UK crypto tax developments to make sure they remain compliant at all times.
During a given tax year, crypto-related capital gains tax might apply when you:
- Swap one cryptocurrency for another.
- Exchange your tokens for a different type of cryptoasset (including NFTs).
- Sell your tokens.
- Exchange crypto for fiat.
- Use your tokens to pay for goods or services.
- Gift or receive crypto.
- Donate tokens to charity.
As noted in the table from the previous section, tax-free allowances also apply to crypto-related transactions in the UK. The tax-free capital gains allowance for capital gains tax will be £6,000 (per tax year) until April 2025, when it will be reduced to £3,000 per tax year.
When you buy crypto using fiat currency (e.g. GBP) in the UK, you will not be liable for capital gains tax on the market value of that initial purchase.
Crypto Capital Gains Tax Rates in the UK
In the UK, capital gains tax rates are based on your income tax bracket – and importantly, they’re set to increase from April 2025. The table below shows the tax rates for the current and next tax years:
| Total Yearly Income (Including Gain) | 2024/2025 Tax Rate | 2025/2026 Tax Rate |
| Less than £50,270 | 10% | 18% |
| More than £50,270 | 20% | 24% |
What Is a Capital Gains Tax-Free Allowance?
The UK capital gains tax is subject to a tax-free allowance, which is the amount of capital gains you can make without incurring any capital gains tax. This is currently £6,000, but will decrease to £3,000 from April 2025.
2) Income Tax on Crypto – When Do You Pay It?
Income tax applies when you earn an employment income (such as wages, a salary, payments for freelance work, an employment bonus, etc.). In the crypto world, it’s also possible to earn other kinds of crypto-related income, such as:
- Mining rewards
- Staking rewards
- Generating income through DeFi platforms
- Airdrops
- Getting paid in crypto
Income tax is likely to apply in these instances – and when it comes to the constantly-evolving world of DeFi (Decentralized Finance), investors may need to consult a tax advisor who is well-versed in the very latest DeFi trends and protocols.
Income Tax Rates
The amount of income tax you have to pay depends on your total income for the tax year, including crypto-related income. The table below shows HMRC income tax rates for the current tax year (April 6 2024 to April 5 2025), which will remain unchanged from April 2025:
| Total Income | Income Tax Rate |
| Less than £12,570 | 0% |
| £12,571 – £50,270 | 20% |
| £50,271 – £125,140 | 40% |
| Over £125,140 | 45% |
UK income tax can apply to many different income sources, and full guidance can be found through the UK Government’s full income tax compliance guide.
Are There Any Tax-Free Income Tax Allowances?
You won’t need to pay income tax if your total income for the tax year is less than £12,570 (as this falls under your tax-free allowance). However, if your total income for the year is £12,751 or more, then you will need to pay income tax in line with the income tax rates outlined in the table from the previous section.
For most people, crypto-related income could be considered as “miscellaneous income” if they receive most of their total income from a primary occupation (i.e. their “day job”). In such cases, a £1,000 “Trading and Miscellaneous Income Allowance” could apply, which allows the first £1,000 of income not related to your primary occupation to be tax-free. This arrangement is also commonly known as the “side hustle allowance”.
How to Know if You Owe Tax on Crypto
As we’ve already seen, tax-free allowances can apply to crypto-related capital gains and income. However, it’s always best to look closely at your crypto market activities and carefully consider whether or not you might need to pay capital gains tax or income tax on your crypto assets in the UK. We’ll look at a few ways you can do this below:
Crypto Tax Software (Paid)
Using high-quality crypto tax software can save you a lot of time, not to mention headaches. As crypto becomes more mainstream, and prices continue to go higher over time, staying on the right side of HMRC will always be important for crypto investors in the UK.
With this in mind, our specialist crypto experts recently reviewed the best crypto tax software for UK investors, and found some truly great providers to choose from.
P&L Statements From Exchanges (Free)
Cryptocurrency exchanges can usually provide detailed profit and loss (P&L) statements for traders and investors who buy and sell cryptoassets on those platforms. These statements are usually downloadable, and can be very helpful in determining how much crypto-related tax you might need to pay.
Crypto Tax Calculators (Free)
You can use our dedicated crypto tax calculator to calculate your crypto taxes as quickly as possible, and receive an easy-to-understand summary of your potential crypto tax liabilities. The calculator covers the UK, as well as all US states – and even Portugal.
Can HMRC Track Crypto?
Since crypto became a mainstream topic, centralized crypto exchanges (such as Binance and Coinbase) have been under pressure to comply fully with tax regulations in the UK. This means that HMRC is able to track crypto transactions on some exchanges under some circumstances – although the precise details mostly remain unclear.
However, since centralized crypto exchanges now typically have well-established and heavily enforced KYC (Know Your Customer) and AML (Anti-Money Laundering) policies, and blockchain transactions on public ledgers are routinely tracked and analysed by various organizations and authorities, it’s best to assume that your crypto activities can be tracked at least to some extent.
The penalties for non-compliance can be severe when it comes to paying taxes, so it’s always best to ensure accurate tax reporting when you make money from crypto-related activities.
How to Report Crypto Taxes to HMRC
The UK tax year begins every April 6, and continues until April 5 the following year. UK crypto taxes (and all other individual taxes) are reported through the Self Assessment process, which must be completed (with taxes paid) by January 31 the year after the tax year ends.
The next UK tax deadline is January 31 2025, which will cover taxes concerning activities between April 6 2023 and April 5 2024.
Is Any Crypto Tax-Free?
Some crypto activities do not necessarily generate what’s known as a “taxable event”. For instance, if you HODL your crypto, transfer it between your own wallets, and/or gift crypto to your spouse or civil partner, these activities do not count as taxable events – and so you won’t have to consider capital gains tax or income tax in these instances.
How to Legally Avoid Crypto Tax in the UK
Before we continue, it’s important to understand the difference between tax avoidance (i.e. legally reducing and minimizing the amount of tax you need to pay) and tax evasion (which is illegal).
Examples of tax evasion would include not reporting your income, hiding your money and assets, and otherwise using misrepresentation, concealment, and even fraud in order to create the impression that you owe less tax than you actually do.
Ways to legally avoid UK crypto tax include:
Making Use of Your Tax-Free Allowances
Tax-free allowances enable you to significantly reduce your tax liabilities and should be applied wherever they can in order to minimize the tax you have to pay while remaining compliant with tax regulations.
For capital gains tax in the UK, you currently get a £6,000 tax-free allowance (which decreases to £3,000 from April 2025). For income tax in the UK, you currently get a tax-free allowance of £12,570 – and you may also be able to apply a £1,000 “Miscellaneous Income Allowance” if your crypto-related activities could be considered a “side hustle”.
Offset Crypto Losses Against Gains
So far, we’ve covered what happens when you make a capital gain or income from crypto-related activities. However, as all market participants know, sometimes trading and investing can lead to capital losses.
These losses can be offset against your crypto gains – and if the resulting subtraction brings the value of your remaining gains below your tax-free allowance, you wouldn’t need to pay capital gains tax at all in that instance.
You can even report capital losses when you submit your UK tax Self Assessment, and carry those losses forward to be deducted from your capital gains in future tax years. This can be a useful tax reduction strategy especially during bear markets, when crypto losses are more likely to be incurred.
Unfortunately, if you literally lose access to your crypto by losing your private key, HMRC will not see this as a capital loss. However, if you can prove that you’ve permanently lost access, HMRC might allow you to make a “negligible value claim” that could enable you to count your lost crypto as a loss for capital gains tax purposes. Since success is not guaranteed, it’s vitally important to keep your private key safe (but also accessible and recoverable) at all times.
Don’t Create a Taxable Event (Selling)
There are many reasons to HODL your crypto – and tax liability reduction is an important one to consider the next time you’re tempted to sell a particular asset. Factor your taxes into your risk management strategy, and you’ll become a more informed and thoughtful investor.
Conclusion
When crypto investors start to make money from their activities, they face an important question: Do you have to pay tax on crypto? Unfortunately, the answer is often “Yes” – and throughout this article, we’ve broken down UK crypto taxes, looked at how much crypto tax you might have to pay in the UK, and outlined some helpful ways to avoid paying tax on crypto while staying within the boundaries of the law.
As the cryptocurrency industry continues to evolve, and crypto becomes more and more mainstream, tax compliance will remain an important issue for British crypto investors. Given the rapidly changing nature of the crypto landscape (especially DeFi), the details of an investor’s individual circumstances and investments, and potential upcoming changes to UK crypto legislation, the best practice is to consult a tax advisor who knows all of the latest industry changes and how they interact with UK tax laws.
They will be able to provide more specific advice, advise on the best ways to reduce your tax liabilities, and give you the peace of mind that comes with knowing your tax reporting and payments are fully compliant with HMRC’s requirements.
FAQs
What is crypto tax in the UK?
What is the best way to calculate crypto tax?
Will HMRC tell me if I need to pay tax on crypto?
Do crypto exchanges share data with HMRC?
How much tax do you have to pay on crypto?
How are crypto airdrops taxed?
Are crypto taxes increasing in 2025?
Is crypto tax software worth it?
References
- New bill introduced in Parliament to clarify crypto’s legal status (UK Ministry of Justice)
- HMRC Cryptoassets Guidance & Policy (HMRC)
- Trading & Miscellaneous Income Allowance (HMRC Internal Manual)
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