Crypto is taxed in the UK. The tax you pay depends on what you do with it.
For most individuals, Capital Gains Tax applies when you dispose of crypto and make a gain. Income Tax can apply when you receive crypto as income, for example from staking, mining or employment.
HMRC says that most individuals hold crypto as an investment rather than as part of a trading business.
HMRC Cryptoassets Manual: individuals
This guide explains the basic UK crypto tax rules for individuals.
Does buying crypto create a tax charge?
Buying crypto does not create a capital gain.
If you buy £10,000 of Bitcoin and keep it, there is no Capital Gains Tax to pay just because its value goes up.
A capital gain normally arises when you dispose of the crypto.
What is a capital gain?
A capital gain is the profit you make when you dispose of an asset.
If you buy Bitcoin for £10,000 and later sell it for £15,000, you have made a £5,000 gain before taking account of any allowable costs.
You are taxed on the gain, not the full £15,000 sale proceeds.
If you sell the Bitcoin for less than its allowable cost, you may make a capital loss instead.
What counts as a crypto disposal?
A disposal does not only mean selling crypto for pounds.
For Capital Gains Tax purposes, you normally dispose of crypto when you:
- sell it for money;
- swap one cryptoasset for another;
- use it to buy goods or services;
- give it to another person, unless an exemption applies.
HMRC treats each of these as a disposal.
HMRC: Check if you need to pay tax when you sell cryptoassets
This means that swapping Bitcoin for Ether is a taxable event. You do not need to withdraw money to your bank account before Capital Gains Tax can apply.
For example, if you bought Bitcoin for £10,000 and later exchanged it for £15,000 worth of Ether, you would have made a £5,000 gain before allowable costs.
Are transfers between your own wallets taxable?
Moving crypto between wallets that you own does not create a disposal if you remain the beneficial owner of the assets.
For example, moving Bitcoin from Coinbase to your own Ledger wallet does not normally create a capital gain simply because you moved it.
HMRC Cryptoassets Manual: disposals
Good records are still important because you need to show that the transaction was a transfer between your own wallets rather than a sale or payment to someone else.
How much can you gain before paying Capital Gains Tax?
Individuals have an Annual Exempt Amount for Capital Gains Tax.
For the 2026/27 tax year, the Annual Exempt Amount is £3,000. It was also £3,000 for 2025/26.
HMRC: Capital Gains Tax rates and allowances
This allowance applies to your total taxable capital gains for the year, not separately to crypto.
For example, if you make £5,000 of crypto gains and have no other gains or allowable losses, you can deduct the £3,000 Annual Exempt Amount. This leaves £2,000 of taxable gains.
If you also make gains from shares or other investments outside tax-exempt accounts, those gains may use some or all of the same allowance.
What are the Capital Gains Tax rates on crypto?
For gains made in 2026/27, the main Capital Gains Tax rates for individuals are 18% and 24%.
The rate you pay depends on your taxable income.
If you have some of your basic rate Income Tax band left, part or all of your taxable gain may be charged at 18%. Any part that falls above the basic rate band is generally charged at 24%.
For example, suppose you have £10,000 of taxable crypto gains after deducting your Annual Exempt Amount and any allowable losses. If your other income has already used all of your basic rate band, the £10,000 would generally be taxed at 24%.
How do you calculate a crypto gain?
The basic calculation is:
Value when disposed of − allowable cost = gain or loss
If you bought an asset for £10,000 and sold it for £15,000, the starting gain is £5,000.
You may also be able to deduct certain costs connected with buying and selling the asset. HMRC allows qualifying costs when calculating a gain, but not every fee or expense will qualify.
HMRC: Check if you need to pay tax when you sell cryptoassets
Crypto calculations become more complicated when you buy the same asset several times at different prices. The UK uses special matching and pooling rules to decide which acquisition cost should be used.
What are the pooling rules?
You normally cannot choose which individual Bitcoin or other token you have sold.
Instead, the UK Capital Gains Tax rules use matching rules. Purchases of the same type of crypto are generally grouped together in a Section 104 pool. The pool keeps track of the amount you hold and its total allowable cost.
There are also special rules for crypto bought on the same day as a disposal and crypto bought within the following 30 days. These transactions are matched before the Section 104 pool is used.
HMRC Cryptoassets Manual: pooling and matching
You do not need to understand every pooling calculation to understand the basic principle: your gain is not always based on the price of the particular coin you think you sold.
What happens if you make a crypto loss?
If you dispose of crypto for less than its allowable cost, you may make a capital loss.
Allowable capital losses can reduce your taxable capital gains. If you cannot use all of your losses in the same year, you can normally carry unused losses forward for use against future gains.
For example, if you make a £10,000 Bitcoin gain and a £4,000 allowable loss on another cryptoasset, your net gains would be £6,000 before applying the Annual Exempt Amount.
Losses generally need to be claimed or reported to HMRC before they can be used.
HMRC: Capital Gains Tax losses
Are transfers between spouses or civil partners taxable?
Transfers between spouses and civil partners who are living together normally take place on a no gain, no loss basis.
This means that transferring crypto to your spouse or civil partner will not normally create an immediate Capital Gains Tax charge.
The recipient usually takes over the relevant acquisition cost for future Capital Gains Tax purposes.
Gifts to other people are different. In many cases, you must use the market value of the crypto when calculating the gain, even if you receive no money for it.
HMRC: Capital Gains Tax and spouses or civil partners
When is crypto taxed as income?
Crypto can also be subject to Income Tax.
HMRC treats crypto received from activities such as staking, mining and some lending arrangements as income where the activity does not amount to a trade. The sterling value when you receive the crypto is generally the starting point for the income calculation.
HMRC: Check if you need to pay tax when you receive cryptoassets
Crypto received from an employer can also be employment income and may be subject to Income Tax and National Insurance.
For example, if you receive £1,000 of crypto as taxable staking income, the £1,000 may be taxable as income.
If you keep those tokens and later sell them for £1,500, you may then make a £500 capital gain. The £1,000 value already taxed as income forms part of the cost used for the later Capital Gains Tax calculation.
This is why the same cryptoasset can be relevant for both Income Tax and Capital Gains Tax at different times.
Do you pay tax on every airdrop?
Not necessarily.
The tax treatment of an airdrop depends on why you received it.
An airdrop received in return for carrying out a service or doing something in return may be taxable as income. Other airdrops can have a different treatment.
If you later dispose of the tokens, Capital Gains Tax may apply to any gain even if no Income Tax was due when you received them.
HMRC Cryptoassets Manual: airdrops
Do you need to report crypto to HMRC?
If your total gains are above your available Annual Exempt Amount, you may need to report them to HMRC and pay Capital Gains Tax.
HMRC’s guidance explains when gains from cryptoassets need to be reported.
HMRC: Check if you need to pay tax when you sell cryptoassets
Crypto income is considered separately. You may need to report income from staking, mining, employment or other crypto activity even where you have no taxable capital gains.
Whether you need to complete a Self Assessment return depends on your wider tax circumstances as well as your crypto activity.
What value should you use for crypto transactions?
UK tax calculations must be made in pounds sterling.
If you sell crypto for pounds, the sterling value is usually clear. If you exchange one cryptoasset for another, you still need to work out the sterling value at the time of the transaction.
HMRC says you should use an appropriate valuation and keep details of how you arrived at the sterling value.
HMRC Cryptoassets Manual: valuation
For example, if you swap Bitcoin for Ether when the Bitcoin you give up is worth £15,000, the transaction still needs a sterling value even though you never received pounds.
What records should you keep?
You should keep enough information to explain how you calculated your income, gains and losses.
For most people this means keeping transaction histories from exchanges and wallets, details of purchases and disposals, sterling values, fees and records of transfers between their own wallets.
Do not rely on being able to download the information from an exchange years later. Keeping your own complete records makes preparing future tax calculations much easier.
HMRC Cryptoassets Manual: record keeping
The basic rules in simple terms
For most UK individuals, the basic crypto tax position is straightforward.
Buying and holding crypto does not create a capital gain. Selling it, swapping it, spending it or giving it away can create a disposal. If the asset has increased in value, you may make a capital gain. If it has fallen in value, you may make a capital loss.
Receiving crypto from staking, mining, employment or some other activities can create taxable income. If you later sell those assets, you may also need to calculate a capital gain or loss.
The calculations can become more complicated when there are lots of transactions, multiple exchanges and wallets, or activities such as DeFi. The starting point remains the same: identify what happened, work out the value in pounds and apply the relevant UK tax rules.
Need help with your crypto tax calculations?
If you need help calculating your crypto capital gains or income, Sat Tax provides specialist crypto tax support for UK individuals.
We can help review your crypto records, calculate gains and income, identify gaps or inconsistencies in the data, and prepare figures for your Self Assessment tax return or other HMRC reporting where required.
If you would like help with your crypto tax position, get in touch with Sat Tax to discuss the records you have and the work required.
This article is for general information only and is not personal tax advice. Tax treatment and reporting requirements depend on your circumstances and the tax rules in place at the relevant time.
