HMRC treats cryptocurrency as a capital asset. Many crypto investors are unaware of their tax obligations, which can result in unexpected bills and penalties.
- When you pay tax on crypto
- Income tax on crypto
When you pay tax on crypto
You trigger a Capital Gains Tax liability when you dispose of cryptocurrency — selling for cash, swapping one crypto for another, spending on goods, or gifting to someone other than a spouse. The CGT annual allowance is £3,000 from 2024/25. Gains above this are taxed at 18% for basic rate taxpayers and 24% for higher rate taxpayers.
Income tax on crypto
Receiving crypto as payment for services, from mining, or from certain staking arrangements is treated as income and subject to income tax at your marginal rate.
Record-keeping
You must keep records of every transaction — date, amount, sterling value at the time, and disposal proceeds. Dedicated crypto tax software like Koinly or CoinTracker can automate much of this.
Reporting
Crypto gains must be reported via self-assessment. HMRC has been increasingly active in pursuing unpaid crypto tax.
Bottom line
Maintain thorough records from the start, report honestly, and consider specialist software or an accountant familiar with crypto if your transaction history is complex.