Staying compliant with HMRC
Staying compliant with HMRC
Avoiding surprises from HMRC starts with accurate reporting. Crypto platforms may soon share customer data with UK tax authorities, so assuming your activity goes unnoticed is risky. Voluntary disclosure is always better than being investigated.
Best practices for UK investors
First, register for Self Assessment if your crypto gains or income push you over thresholds. Report capital gains or crypto-related income on your annual tax return. File by 31 January for the previous tax year. If you're unsure, consult a tax adviser experienced in digital assets—many traditional accountants are still catching up.
Don’t forget: even if your crypto is stored overseas or traded on decentralised exchanges, UK residents are taxed on worldwide income. HMRC is aggressively closing in on crypto underreporting with global data-sharing agreements and new digital asset reporting mandates on the horizon.
Register for Self Assessment if needed
Report gains and income yearly
Maintain detailed records for 5+ years
Use crypto tax software to automate calculations
Seek help if uncertain—penalties are steep
Finally, plan ahead. Tax-loss harvesting, strategic disposals, and understanding tax deadlines can optimise your returns. Crypto might be volatile—but your tax game shouldn't be. Stay informed, stay compliant, and avoid letting taxes eat your gains.
How to calculate crypto gains
How to calculate crypto gains
Calculating gains can be deceptively complex. HMRC expects you to use the ‘Share Pooling’ method, where multiple purchases of the same crypto are pooled together to determine your average acquisition cost. This means you don’t report gains on a first-in-first-out (FIFO) or last-in-first-out (LIFO) basis—UK rules are stricter.
Using the pooling method
If you buy Bitcoin at different times and prices, you must average those purchases to calculate your base cost. When you sell, trade, or dispose of some of that Bitcoin, you compare the disposal proceeds to the average cost per unit to calculate the gain or loss.
There are special rules like the ‘Same Day Rule’ and ‘30-Day Rule’ to prevent tax avoidance by quickly rebuying assets. These require careful tracking, especially for high-volume traders.
Same Day Rule: applies to crypto bought and sold on the same day
30-Day Rule: applies to crypto repurchased within 30 days of selling
Section 104 Pool: average of all earlier crypto bought
Losses can offset gains but must be reported
CGT allowance is £3,000 per tax year (from April 2024)
The key is keeping airtight records. HMRC requires dates, GBP values at transaction time, type of crypto, amounts, and wallet addresses. Good software or spreadsheets are essential, especially as exchanges rarely keep records that meet UK standards.
When crypto is taxed in the UK
When crypto is taxed in the UK
In the UK, HMRC classifies crypto assets as property, not currency. This classification determines the type of tax you owe. Most commonly, you’ll face Capital Gains Tax (CGT) when you dispose of crypto, and Income Tax when you earn it through activities like mining or staking.
Capital Gains Tax (CGT)
Disposing of crypto includes selling it for fiat, trading one token for another, gifting it (unless to a spouse), or using it to buy goods and services. These are considered taxable events. You’re taxed on the profit (gain), not the total sale amount. The annual tax-free CGT allowance for individuals is £3,000 from April 2024 (down from £6,000 in 2023–24), so if your total gains are under this threshold, no tax is due.
Income Tax
When you earn crypto—via mining, staking, airdrops (in some cases), or as payment for services—it may be taxed as income. The value in GBP at the time you receive it must be added to your income and taxed according to your income tax band. National Insurance contributions may also apply.
Selling crypto for fiat = CGT
Trading tokens = CGT
Staking rewards = Income Tax
Getting paid in crypto = Income Tax
Gifting crypto (non-spouse) = CGT
Knowing the difference between CGT and Income Tax is crucial. Misclassify your earnings and you could face HMRC penalties. Be proactive—track your activity from day one.
Last Update
31.3.25
HOME > FAQ
WHAT TAX DO I PAY IN THE UK WHEN INVESTING IN CRYPTO?
Investing in crypto in the UK? You may owe tax—and it depends on what you do. HMRC taxes crypto as property, not currency, so capital gains and income tax may apply. Whether you’re trading Bitcoin, staking Ethereum, or earning NFTs, this guide breaks down what tax you owe and how to stay compliant. From capital gains thresholds to record-keeping tips, we’ll cover it all with a sharp financial lens and the practicality of a trader who’s been there.