Crypto Tax in the UK 2025-26: What HMRC Says About Bitcoin and Digital Assets
HMRC does not consider cryptocurrency to be currency. Instead, it is treated as a capital asset, like shares. Every time you dispose of crypto — selling for cash, swapping one coin for another, or paying for goods — you trigger a potential Capital Gains Tax (CGT) liability. The annual exempt amount for CGT in 2025-26 is £3,000. Gains above that are taxed at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers.
What counts as a disposal?
Under HMRC's guidance (CRYPTO10000 series in the HMRC manual), the following all count as disposals:
- Selling cryptocurrency for fiat currency (GBP, USD, EUR, etc.).
- Exchanging one cryptocurrency for another (BTC to ETH is a disposal of BTC).
- Using cryptocurrency to pay for goods or services.
- Gifting cryptocurrency to someone other than your spouse or civil partner.
- Donating cryptocurrency to charity (different treatment — usually no CGT, and income tax relief may apply).
Simply moving cryptocurrency between your own wallets is not a disposal and does not trigger CGT.
The Section 104 pooling rule
HMRC applies share pooling rules to cryptocurrency. All units of the same coin you hold are treated as a single pool with a pooled cost. When you buy more, the average cost of the pool increases. When you sell, you calculate the gain using the average pooled cost at the time of disposal. You cannot cherry-pick specific units to minimise gains.
The 30-day rule (bed and breakfast)
To prevent artificial loss-making, HMRC applies a 30-day rule: if you sell cryptocurrency and buy back the same coin within 30 days, the repurchase is matched against the sale first (overriding the pool). This prevents selling a coin at a loss and immediately rebuying to crystallise the loss while maintaining your position.
CGT rates for crypto in 2025-26
| Taxpayer type | CGT rate on crypto gains |
|---|---|
| Basic rate taxpayer | 18% |
| Higher rate taxpayer | 24% |
| Additional rate taxpayer | 24% |
Note: these rates were updated in the October 2024 Budget (increased from 10%/20%). Gains are added to your other income to determine which rate applies. If your total income (including gains) stays within the basic rate band (up to £50,270), you pay 18%.
Staking rewards
The tax treatment of staking rewards is nuanced. HMRC's position is that staking rewards received in return for validating transactions are likely to be miscellaneous income, taxable as income at the time of receipt (based on the GBP value on the day received). When you later sell the staked tokens, CGT applies on any gain relative to the income value at which they were originally taxed. This means staking rewards are effectively taxed twice — once as income on receipt, and again as a capital gain on disposal.
Airdrops
HMRC distinguishes between two types of airdrop:
- Airdrops in return for a service (e.g. completing a task, holding a qualifying token): treated as income at receipt, taxed as miscellaneous income.
- Unsolicited airdrops (no service provided): HMRC's view is that these are capital in nature, with a zero acquisition cost, meaning the full sale proceeds are a capital gain when you sell.
DeFi (Decentralised Finance)
DeFi is the most complex area of crypto tax. HMRC published supplementary guidance in 2023 covering lending, liquidity pools, and yield farming. The key points:
- Lending crypto: If you deposit crypto into a lending protocol and receive a different token in return, this may constitute a disposal of the original crypto (even if you intend to get it back). HMRC's analysis depends on whether beneficial ownership transfers.
- Liquidity pools: Adding liquidity to a pool (receiving LP tokens) may or may not be a disposal — HMRC's guidance is still evolving. Most crypto accountants currently treat it as a disposal.
- Yield farming rewards: Treated similarly to staking — income on receipt.
Reporting on Self Assessment
You must report crypto gains if either:
- Your total capital gains exceed the £3,000 exempt amount, or
- Your gross disposal proceeds exceed £50,000 (even if no tax is due).
Report on the Capital Gains supplementary pages (SA108) of your Self Assessment return. The deadline is 31 January following the tax year. If you have gains and no Self Assessment registration, register at gov.uk by 5 October after the tax year.
HMRC data gathering from exchanges
HMRC has issued information notices to UK-regulated cryptocurrency exchanges — including Coinbase UK, Kraken, and others — requiring them to hand over customer data including names, addresses, and transaction histories. HMRC uses this to identify taxpayers who have not declared gains. Do not assume crypto is invisible to HMRC.
Record-keeping
You must keep records of every transaction: date, type (buy/sell/swap), amount in GBP at the time, fees paid, and wallet addresses. Many crypto tax software tools (Koinly, CoinTracker, TaxBit) can import from exchanges via API and calculate your gains automatically, including the pooling rules. These tools are not HMRC-endorsed but the calculations they produce can be used to complete your return.
Frequently asked questions
Is crypto-to-crypto really taxable? I never touched any cash.
Yes. HMRC is explicit: swapping Bitcoin for Ethereum is a disposal of Bitcoin at the GBP value of the Ethereum received (or the Bitcoin disposed of — whichever is more easily determined). The fact that you never converted to cash is irrelevant. This is one of the most surprising aspects of UK crypto tax for new investors.
Can I offset crypto losses against other capital gains?
Yes. Crypto losses can be offset against other capital gains in the same tax year (including gains on shares or property), and excess losses can be carried forward to future years. You must report losses on your Self Assessment return in the year they arise — they do not arise automatically.
What about NFTs?
HMRC treats non-fungible tokens as a separate category of crypto asset. The CGT rules (disposal, pooling, annual exempt amount) apply in broadly the same way, though HMRC notes that some NFT activity could be considered a trade (in which case income tax would apply instead). The boundaries are not always clear and specialist advice is recommended for anyone with significant NFT activity.