HMRC taxes most crypto gains as Capital Gains Tax. Here's everything UK investors need to know about the £3,000 annual exempt amount, CGT rates, the 30-day rule, and what counts as a disposal.
Important Risk Warning
This is not financial advice. Cryptocurrency investments are highly volatile. The value of your investment can go down as well as up, and you could lose all the money you invest. Don't invest unless you're prepared to lose all the money you put in.
London — If you bought crypto at any point in the last five years and you've sold, swapped, spent or gifted any of it, there's a reasonable chance you owe HMRC money. Not because you've done anything wrong — but because the UK tax rules around crypto are far more sweeping than most people expect. Understanding them properly is the difference between a clean self-assessment return and an unwelcome nudge letter from the Revenue.
The good news is the framework isn't complicated once you know the shape of it. The bad news is that almost every crypto action counts as a taxable event, and the new CARF reporting regime means HMRC will shortly know your transaction history better than you do.
HMRC treats cryptoassets as capital property — not currency. That means every time you part with a crypto token, in any form, you're making a taxable disposal that may create a capital gain or allowable loss. The list includes: selling crypto for sterling, swapping one token for another (yes, BTC-to-ETH is taxable), spending crypto on goods or services, gifting crypto to someone other than your spouse or civil partner, and donating crypto to charity in some circumstances.
What this means in practice is that a trader who buys Bitcoin, converts it to Ethereum, then sells the Ethereum for cash has made two separate taxable disposals — even if they never touched pounds at any intermediate stage.
For the 2025-26 tax year, every individual has a Capital Gains Tax annual exempt amount of £3,000. Only gains above that threshold are taxable. The rate you pay depends on which income tax band your total income falls into: basic-rate taxpayers pay 18% on crypto gains; higher and additional-rate taxpayers pay 24%. These rates apply to disposals made on or after 30 October 2024 — before that date, the old rates of 10% and 20% applied.
One nuance worth noting: if your crypto gain straddles the basic-rate band — that is, part of the gain falls within your remaining basic-rate band and the rest pushes into higher-rate territory — you pay 18% on the first part and 24% on the rest. It's worth modelling this before December if you're close to the threshold.
HMRC uses a specific pooling method to value your crypto holdings. Each type of token you hold sits in its own "Section 104 pool". When you buy more of the same token, the cost base of the pool increases. When you sell, you calculate a proportional gain or loss against the pool's average cost.
So if you bought 1 Bitcoin at £20,000 and another at £40,000, your pool contains 2 BTC with a total allowable cost of £60,000 — an average of £30,000 each. Sell one BTC at £50,000 and your gain is £20,000, not £10,000. The average-cost method prevents investors from selectively picking their cheapest coins to minimise gains on a disposal.
This is the rule that catches the most people out. If you sell crypto and then rebuy the same token within 30 days, HMRC ignores the Section 104 pool and instead matches your disposal against the reacquisition at its actual cost. The same-day rule extends this: if you sell and rebuy on the very same day, that's matched first.
The practical effect is that loss-harvesting — selling a position to crystallise a capital loss before the end of the tax year, then immediately buying back in — doesn't work for crypto. If you sell on 1 April and rebuy on 15 April, your loss is deferred. You'd need to wait 31 days before buying back if you want the loss to count.
HMRC's guidance makes clear that investors should retain records of the date and quantity of every transaction, the value in sterling at the time, any pooling calculations, and the fees paid. Gas fees and exchange fees are allowable costs and can reduce your gain — but you need the receipts.
This record-keeping requirement applies even if you made a loss for the year. Losses can be carried forward indefinitely and offset against future gains, so they're worth tracking even when they don't produce an immediate benefit.
From January 2027, under the OECD's Cryptoasset Reporting Framework (CARF), every UK-regulated exchange and custodian will be required to submit annual transaction reports to HMRC. The first returns, covering calendar year 2027, are due by 31 May 2028. That won't cover the current tax year — but it means the era of HMRC relying on voluntary self-disclosure for crypto is drawing to a close. Getting your records in order now is far less painful than reconstructing years of trades under pressure later.
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