How is Capital Gains Tax calculated on crypto?
In simple terms, you calculate the gain by comparing what the cryptoasset cost you with its value when you dispose of it, after taking account of allowable costs and the relevant HMRC pooling rules.
For example, suppose you buy Bitcoin for £10,000 and later dispose of it for £18,000. Ignoring fees and other transactions for simplicity, your gain would be:
Sale proceeds: £18,000
Original cost: £10,000
Capital gain: £8,000
You then need to consider your other capital gains and allowable losses during the tax year, as well as your annual exempt amount.
What is the Capital Gains Tax allowance for crypto in 2026/27?
For the 2026/27 tax year, the Capital Gains Tax annual exempt amount for individuals is £3,000. This means you generally only pay CGT on your overall taxable gains above £3,000, after taking account of allowable losses and reliefs.
The CGT rates for individuals from 6 April 2026 are:
- 18% for gains falling within the basic rate band.
- 24% for gains falling within the higher or additional rate bands.
Your Capital Gains Tax rate depends on your taxable income as well as the amount of your taxable gains.
Example of crypto Capital Gains Tax
Imagine you have taxable income of £30,000 and make a taxable crypto gain of £10,000 during the 2026/27 tax year.
After the £3,000 annual exempt amount, you have £7,000 of taxable gains. The amount of CGT you actually pay will depend on how much of your basic rate band remains available after taking your taxable income into account.
This is why it is important to calculate your Income Tax position and Capital Gains Tax position together rather than simply applying 18% or 24% to your crypto profits.
Does swapping one cryptocurrency for another create a tax bill?
Yes. This is one of the most commonly misunderstood aspects of crypto taxation.
If you exchange one cryptoasset for another, HMRC generally treats this as a disposal of the first asset and an acquisition of the second.
For example, if you bought Bitcoin for £5,000 and later exchanged it for Ethereum when the Bitcoin was worth £12,000, you would generally have a £7,000 gain before considering allowable costs, losses and the relevant pooling rules.
You do not avoid CGT simply because you did not withdraw pounds into your bank account.
What about crypto losses?
Crypto losses can be important when calculating your overall Capital Gains Tax liability.
If you dispose of cryptoassets for less than their allowable acquisition cost, you may have a capital loss. Subject to the relevant rules, capital losses can be used to reduce capital gains.
HMRC also allows certain unused capital losses to be carried forward, but you need to make sure losses are properly identified and reported within the relevant time limits.
Keeping accurate records of both gains and losses is particularly important if you make a large number of transactions across several exchanges.
How are crypto exchange fees treated?
Crypto transactions can involve a wide range of costs, including trading fees, transaction fees and other exchange charges.
Some costs may be deductible when calculating a capital gain, but the rules are not as simple as deducting every fee shown on your exchange statement.
HMRC’s cryptoassets guidance confirms that the deductibility of exchange fees depends on the type of fee and the tax treatment of the transaction.
For this reason, it is worth keeping a detailed record of fees rather than simply calculating your gains using the headline buy and sell prices.
How are cryptoassets received as income taxed?
Not all crypto tax is Capital Gains Tax.
If you receive cryptoassets because of your work, a business activity or certain other arrangements, the crypto may initially be taxable as income.
HMRC identifies several situations where Income Tax can apply, including crypto received from employment, mining, staking, lending and certain decentralised finance activities.
Crypto received from employment
If an employer pays an employee in cryptoassets, the value of the payment can be treated as employment income. PAYE and National Insurance obligations may also arise depending on the circumstances.
This is particularly relevant for company directors and employers who offer cryptocurrency as part of a remuneration package.
Mining and staking
Crypto received through mining or similar activities can potentially be taxable as income. Whether the activity amounts to a trade depends on factors such as the degree of activity, organisation, risk and commerciality.
If mining does not amount to a trade, HMRC says the sterling value of the tokens at the time they are received can be taxable as miscellaneous income, subject to the relevant rules and allowable expenses.
Where crypto is taxed as miscellaneous income, the £1,000 trading allowance may cover small amounts received, meaning no Income Tax is due if your total relevant income stays within that limit.
If you later dispose of crypto that was previously taxed as income, a further Capital Gains Tax calculation may be required on any increase in value after the original income tax point.
How is crypto taxed if you run a limited company?
If your limited company owns or trades cryptoassets, the tax treatment can be different from personal crypto investing.
For example, if a company holds exchange tokens as an investment, HMRC states that the company can be liable to Corporation Tax on chargeable gains when the tokens are disposed of.
If cryptoassets form part of an existing company trade, the profits and expenses may instead form part of the company’s trading profits.
HMRC says that whether buying and selling cryptoassets amounts to a trade depends on the circumstances, including factors such as frequency, organisation and intention.
This distinction can have a significant effect on the company’s tax calculations, so businesses should not assume that personal crypto tax rules can simply be transferred to a company.
Can my company buy cryptocurrency?
Yes, a limited company can hold cryptoassets, but there are accounting, tax and record-keeping considerations to address.
If a company is considering investing surplus cash into cryptocurrency, directors should think carefully about:
- how the cryptoassets will be recorded in the company’s accounts
- the Corporation Tax treatment of gains and losses
- the company’s accounting policies
- the source of funds used to acquire the cryptoassets
- how wallets and exchange accounts will be controlled
- how transactions will be documented
- the potential impact on company cash flow and risk
It is also important to keep company crypto activity separate from personal wallets and investments. Mixing personal and company crypto can make the accounting and tax position considerably harder to establish.
What records do you need to keep for crypto tax?
Good record keeping is one of the most important parts of managing crypto tax.
HMRC places the responsibility on the taxpayer to maintain their own records. Crypto exchanges may not retain transaction histories indefinitely, and an exchange could potentially stop operating or become inaccessible.
Your records should include information such as:
- the type of cryptoasset
- the date of each transaction
- whether you bought, sold or exchanged the asset
- the number of units involved
- the sterling value at the time of the transaction
- the cumulative number of units held
- transaction and exchange fees
- wallet addresses
- bank statements relating to purchases and sales
- exchange transaction histories
It is sensible to download transaction histories from every exchange and wallet you use rather than relying on the platform to retain them indefinitely.
What is cryptoasset pooling?
Calculating the cost of crypto can become complicated if you buy the same type of token multiple times.
HMRC’s rules include pooling provisions for cryptoassets. Rather than simply matching every sale to the oldest purchase, the cost of qualifying acquisitions is generally calculated using a pooled approach, alongside specific rules for assets acquired and disposed of within certain time periods.
The 30-day matching rules can be particularly important when you sell and then reacquire the same cryptoasset within a short period. HMRC’s official cryptoassets guidance should be checked when transactions become complex.
For investors with hundreds or thousands of transactions, specialist crypto tax software or professional accounting support can make the calculation much more manageable.
How do you report crypto gains to HMRC?
If you have taxable crypto gains, you may need to report them to HMRC.
For individuals, gains can generally be reported through Self Assessment. Eligible UK residents can also use HMRC’s real-time Capital Gains Tax service for certain gains.
HMRC confirms that other capital gains can be reported through a Self Assessment tax return or, where eligible, through the real-time CGT service. If using the real-time service, the gain must generally be reported by 31 December after the end of the tax year in which the disposal was made, with payment due by 31 January.
Self Assessment deadlines for crypto gains
For the 2025/26 tax year, which ended on 5 April 2026, an online Self Assessment tax return is normally due by 31 January 2027, with any tax owed also due by 31 January 2027.
If you are required to make payments on account, a second payment deadline of 31 July may also apply.
Do not leave your crypto calculations until the Self Assessment deadline. A large number of transactions can take considerable time to reconcile, particularly where you have used several exchanges or wallets.
The £50,000 reporting threshold
The £3,000 annual exempt amount and the reporting threshold are two separate things. Even if your gains fall within the £3,000 allowance, you may still need to report your disposals if your total disposal proceeds for the tax year exceed £50,000. This threshold is based on the total value of your disposals, not your profit.
This catches out a lot of active crypto investors. Because every crypto-to-crypto swap counts as a disposal, total proceeds can pass £50,000 across a year of trading even where the overall gain is modest. If you are already registered for Self Assessment, you should also report disposals where you are claiming a capital loss.
What happens if you do not declare crypto gains?
Crypto profits are not outside the UK tax system simply because the transactions take place through an online exchange or blockchain.
HMRC has specific cryptoasset guidance and is also implementing international information-sharing arrangements. Under the Cryptoasset Reporting Framework, relevant cryptoasset service providers have reporting obligations relating to users and transactions.
If you have previously failed to declare taxable crypto income or gains, it is better to address the position rather than assume HMRC will not find out.
Late filing and late payment can result in penalties and interest. The amount depends on the circumstances and how late the return or payment is.
If you think you have undeclared crypto income or gains from an earlier tax year, speak to an accountant or tax adviser before approaching HMRC so that the position can be reviewed properly.
Do you have to pay tax when you simply hold cryptocurrency?
Generally, no. Simply holding cryptoassets does not normally create a Capital Gains Tax charge.
The tax point usually arises when you dispose of the asset, such as by selling it, exchanging it for another cryptoasset or using it to purchase something.
However, if you receive additional cryptoassets while holding your existing investments, such as through staking or certain airdrops, separate Income Tax considerations can arise.
Is transferring crypto to another wallet taxable?
Moving crypto between wallets that you own and control is generally not a taxable disposal because you have not changed beneficial ownership.
However, it is important to keep records showing that both wallets belong to you. This can help demonstrate that a transfer was simply a movement between your own wallets rather than a sale or gift.
Are gifts of cryptocurrency taxable?
Giving cryptoassets away can be a disposal for Capital Gains Tax purposes.
There is an important exception for gifts to a spouse or civil partner, where special rules generally mean that the transfer is made on a no gain, no loss basis.
Gifts to other people can potentially trigger a CGT calculation based on the relevant market value rules, even if you do not receive money in return.
Practical crypto tax tips for UK investors and business owners
If you are actively buying, selling or receiving cryptocurrency, a few simple habits can make your tax reporting much easier.
- Keep records from day one. Download transaction histories regularly from every exchange you use.
- Record values in pounds. HMRC requires transaction values to be established in sterling for tax purposes.
- Track every crypto-to-crypto exchange. Swapping one token for another can be a taxable disposal.
- Keep wallet records. Record wallet addresses and transfers between your own wallets.
- Track fees separately. Do not assume every exchange or transaction fee is automatically deductible.
- Record losses as well as gains. Losses can be valuable when calculating your overall CGT position.
- Do not mix company and personal crypto. Keep business and personal transactions clearly separated.
- Plan before selling. Consider the potential CGT consequences before making large disposals.
- Get professional advice if your activity is complex. High transaction volumes, DeFi, staking, mining, overseas exchanges and company ownership can all make the tax position more complicated.
Useful HMRC resources for crypto investors
Final thoughts on Understanding Crypto Tax in the UK
For most UK individuals, crypto investing is treated as an investment rather than a financial trade. This means Capital Gains Tax will usually be the main tax consideration when you sell, exchange or otherwise dispose of cryptoassets at a profit.
However, crypto tax can become more complicated when you trade at a highly organised level, receive crypto through employment, mine or stake tokens, participate in DeFi or hold crypto through a limited company.
The key is to keep detailed records, understand that crypto-to-crypto exchanges can be taxable disposals, account for losses and fees correctly, and report taxable income and gains to HMRC on time.
If your crypto activity is becoming a significant part of your finances or business, getting professional advice before submitting your tax return can help you avoid costly mistakes and make sure your tax position is properly accounted for.
Get help with your crypto tax
Crypto tax can get complicated fast, especially with multiple exchanges, wallets, swaps or company holdings. Accounting Wise can handle the calculations, reporting and record keeping so your position is accurate and filed on time.
Request a Call Back or call us on 0330 113 8442 to talk it through.
