Cryptocurrency is growing fast in the UK, but many investors and traders don’t realise they owe tax on their crypto. If you’re buying, selling, staking, or holding crypto like Bitcoin or Ethereum in the UK, HMRC (Her Majesty’s Revenue and Customs) may expect a portion of your profits.
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This step-by-step guide will help you understand how crypto is taxed in the UK, and what actions you need to take as a crypto investor in 2025.
Step 1: Understand the Basics – Is Crypto Taxable in the UK?
Yes, cryptocurrency is taxable in the UK. HMRC treats crypto as property, not currency. This means:
- You may owe Capital Gains Tax (CGT) when you sell, swap, gift (not to a spouse), or spend crypto.
- You may owe Income Tax if you earn crypto from mining, staking, airdrops, or receiving it as salary.
Quick Tip: Holding crypto without selling or using it usually has no tax—but keep records!
Step 2: Identify Taxable Events
Here are some common crypto activities and their tax implications in the UK:
| Crypto Activity | Tax Type | Is It Taxable? |
|---|---|---|
| Buying crypto | No tax | ❌ Not taxable |
| Selling crypto | Capital Gains Tax | ✅ Taxable |
| Swapping crypto | Capital Gains Tax | ✅ Taxable |
| Spending crypto | Capital Gains Tax | ✅ Taxable |
| Gifting crypto | Capital Gains Tax | ✅ Taxable (unless to spouse) |
| Mining | Income Tax | ✅ Taxable |
| Staking | Income or CGT | ✅ Depends on how it’s earned |
| Airdrops | Income Tax | ✅ Taxable |
Step 3: Track Your Transactions
HMRC expects accurate records of all your crypto activity. You should track:
- Date of transaction
- Type of transaction (buy, sell, swap, etc.)
- Cryptocurrency involved
- Amount in GBP at the time
- Wallet addresses
- Exchange/platform used
Use crypto tax tools like Koinly, CoinTracker, or Accointing to automate this step.
Step 4: Calculate Your Capital Gains
Capital Gains Tax is based on the profit made from selling or exchanging your crypto. Here’s the
formula: Capital Gain = Sale Price – Purchase Price – Allowable Costs
Example:
- You bought 1 ETH for £1,000
- Sold it later for £2,500
- Your gain is £1,500
- If you’re over the £3,000 CGT allowance (2025), you pay tax on the profit
Step 5: Check the Capital Gains Tax Rates
As of the 2025/26 tax year:
- CGT allowance: £3,000 per person
- Basic rate taxpayers: Pay 10% on gains above allowance
- Higher/additional rate taxpayers: Pay 20% on gains above allowance
Step 6: Understand Income Tax on Crypto
Some crypto income is taxed as income, not capital gain. This includes:
- Crypto from staking
- Mining rewards
- Airdrops (if received as part of a promotion or job)
- Crypto as payment for services
This is added to your total income and taxed at:
- 20% (basic)
- 40% (higher)
- 45% (additional)
💼You may also need to pay National Insurance on income-based crypto earnings.
Step 7: Report to HMRC
You must report your crypto income and gains via:
Self Assessment Tax Return (SA100)
Include crypto information in:
- SA108 form for Capital Gains
- Self-employment/Other Income sections for crypto income
Deadline:
- 31 January 2026 for online returns for 2024/25 tax year
- 31 October 2025 for paper returns
Even if you didn’t receive a tax return request, you’re still legally required to report taxable crypto.
Step 8: Reduce Your Tax Legally
There are smart ways to reduce your crypto tax in the UK:
- Use the £3,000 CGT allowance
- Offset losses from previous crypto trades
- Transfer crypto to your spouse (no tax)
- Invest via tax-free accounts (crypto not yet allowed in ISAs, but stay updated)
- Consider donating crypto to charity (potential tax relief)
Step 9: Avoid These Common Mistakes
- Not reporting crypto at all
- Thinking only withdrawals are taxable
- Using incorrect GBP values
- Not keeping records
- Ignoring crypto received from referrals or affiliate programs
Step 10: Stay Updated and Get Help
Crypto tax rules are evolving in the UK. To avoid penalties:
- Follow HMRC’s crypto guidelines
- Stay aware of yearly CGT allowance changes
- Use an accountant or crypto tax advisor if unsure
Conclusion: Don’t Fear UK Crypto Tax—Just Be Smart
If you’re involved with crypto in the UK, you can’t ignore taxes. But don’t worry—it’s manageable if you:
- Track all your crypto activity
- Understand how and when tax applies
- Use tools or hire a professional when needed
By following this step-by-step guide, you’ll stay on HMRC’s good side and feel more confident managing your crypto portfolio in 2025.