How is crypto taxed in the UK?

In the UK, HM Revenue and Customs (HMRC), the tax authority, does not treat crypto as currency or money. Most individuals pay Capital Gains Tax on the profit when they dispose of cryptoassets, and Income Tax on tokens they receive as pay or as certain rewards.

When is Capital Gains Tax due?

Capital Gains Tax applies when you dispose of cryptoassets. HMRC counts four things as a disposal:

• selling tokens
• exchanging them for a different type of cryptoasset
• using them to pay for goods or services
• giving them away, unless the gift is to a spouse, civil partner or charity

HMRC says it is exceptional for an individual's buying and selling to amount to a trade, which would be taxed as income.

For the tax year running from 6 April 2026 to 5 April 2027, the first £3,000 of total gains is tax-free, an allowance known as the annual exempt amount. Above that, the rate is 18% on gains that fall within the basic Income Tax band and 24% on gains above it.

How is the gain worked out?

The gain is normally the sale value minus the cost, but HMRC does not let holders pick which coins they sold. Each type of token goes into a pool with a single averaged cost, called a section 104 pool, and each sale takes a share of that cost.

Two matching rules override the pool. Tokens bought on the same day as a sale are matched to it first. Next come tokens bought in the 30 days after the sale. Only then does the pool apply. NFTs are separately identifiable and are not pooled.

When does Income Tax apply?

Income Tax applies when tokens arrive as earnings. That includes crypto paid by an employer, and rewards from mining or staking, which HMRC taxes at their sterling value when received.

An airdrop is taxed as income if it is given in return for a service. HMRC says one received for doing nothing in return may not be. Either way, selling the tokens later can still produce a capital gain.

How is it reported?

Gains are reported through a Self Assessment tax return, which has had a dedicated cryptoasset section since the 2024 to 2025 return, or through HMRC's real-time Capital Gains Tax service. Losses must be reported to HMRC before they can be set against gains.

HMRC is also receiving more data. Since 1 January 2026, a crypto exchange or other provider operating in the UK has had to collect customers' details and transaction summaries under an international standard, the Cryptoasset Reporting Framework. The first reports are due by 31 May 2027. A separate guide covers who regulates crypto in the UK.

Tax rules differ by country and change from year to year. Check HMRC or a qualified tax professional for your own situation.