Crypto’s not just for tech pros or risk-takers anymore. It’s mainstream. Whether you’re trading Bitcoin, dabbling in NFTs or earning crypto through side projects, it’s all part of the financial world now. As such, HMRC doesn’t see cryptocurrency as fun money. In the UK, it’s treated as a taxable asset, just like shares or property.

Exactly how and when you pay crypto tax in the UK depends on what you do with it. And that’s where most people get confused. Don’t worry, though. We’re here to make crypto tax simple. 

In this article we'll

  • Break down HMRC’s rules
  • Show you when tax applies
  • Help you stay on the right side of the law and your wallet.

What does HMRC consider as cryptocurrency?

Cryptocurrency is a digital asset. That could be Bitcoin, Ethereum or even NFTs. These are stored and exchanged electronically. Instead of being controlled by banks, crypto runs on a decentralised network called the blockchain. Every transaction is recorded, creating a public, traceable ledger. So yes, even though it’s digital, HMRC can still track what’s going on.

For tax purposes, HMRC doesn’t class crypto as actual money or foreign currency. Instead, it’s treated as an asset like shares, property or gold. That means any time you sell, trade or spend your crypto, you could trigger a taxable event.

Some people invest in crypto, hoping its value will rise. Others use it for payments or earn it through work or rewards. HMRC looks at what you’re doing, not just what you own, to decide if you owe cryptocurrency tax in the UK.

Do I have to pay tax on crypto in the UK?

Whether you owe tax depends on how you use your cryptocurrency. If you’re buying and selling crypto as an investment, HMRC usually treats any profit as a capital gain. That means you might need to pay Capital Gains Tax (CGT) on your earnings once you’ve used up your annual allowance. For the 2025/26 tax year, that’s £6,000.

If you’re earning crypto through mining, staking, airdrops or being paid for work, HMRC sees that as income. You’ll pay Income Tax on it at your usual rate. Record-keeping is key. HMRC expects you to track what you bought, sold and earned, including dates, values and wallet addresses.

For example, if you bought Bitcoin for £2,000 and later sold it for £3,000, your £1,000 profit could be taxable under capital gains tax on cryptocurrency rules.

Don’t forget about personal tax allowances, which can help reduce your overall tax liability. Keeping detailed records of your transactions is also important for complying with HMRC regulations.

When do you pay tax on cryptocurrency?

You only pay crypto tax in the UK when something taxable happens. This is known as a disposal event. That’s any time you sell, swap, spend or earn crypto in a way that changes its ownership or value. This is how HMRC breaks it down:

Selling crypto for cash

If you sell your crypto for pounds or any other fiat currency, it’s a disposal. You’ll need to work out your gain or loss based on the price you bought it for versus what you sold it for. If you’ve made a profit, it might be subject to Capital Gains Tax.

For example, if you bought £1,000 of Bitcoin and sold it later for £1,800, the £800 gain could be taxable.

Trading one crypto for another

Exchanging one token for another, like swapping Ethereum for Solana, this also counts as a disposal. HMRC treats it just like selling one asset and buying another, so you’ll need to calculate the market value of both coins at the time of the trade.

Even if you never convert it back to cash, you may still owe crypto tax in the UK.

Using crypto to buy goods or services

Spending crypto to pay for something like a laptop, coffee or even concert tickets is another taxable event. HMRC sees that as disposing of your crypto to buy something of value, so you might need to report it as a gain or loss.

Earning crypto through mining, staking or airdrops

If you earn crypto through mining, staking or airdrops, HMRC treats it as income. You’ll need to pay Income Tax and possibly National Insurance, depending on how much you earn.

For example, if you receive new tokens worth £200 for staking, you’d declare that as income at the time you receive them.

Receiving crypto as payment

If you’re self-employed or freelancing and get paid in crypto, HMRC sees this as income in kind. You’ll need to convert the value to pounds on the day you’re paid and include it in your Self Assessment tax return.

Not every crypto action triggers tax though. Simply holding crypto, moving it between wallets or gifting to a spouse isn’t taxable. But it’s still smart to keep records in case HMRC ever asks.

Capital Gains Tax Calculator

 

Types of crypto taxes in the UK

HMRC doesn’t have a special crypto tax. Instead, your cryptocurrency is taxed under the same rules that apply to other assets or income. The type of tax depends on how you use your crypto.

Capital Gains Tax (CGT)

If you sell, trade or spend crypto and make a profit, that gain is usually subject to Capital Gains Tax. You only pay CGT on your total gains above the annual allowance, which is £6,000 for 2024/25.

Your CGT rate depends on your overall income. Basic rate taxpayers pay 10%, while higher and additional rate taxpayers pay 20% on gains above the threshold.

If you’re not sure how to work out your gain, try our Capital Gains Tax calculator or read our full Capital Gains Tax advice guide.

Income Tax on crypto

If you earn crypto from mining, staking, airdrops or as payment for work, it’s treated as income. You’ll pay Income Tax at your normal rate, and if you’re self-employed, you might also owe National Insurance.

If you later sell or trade that crypto for more than it was worth when you received it, you could also owe Capital Gains Tax on the increase in value.

So, crypto can be taxed twice, depending on what you do with it. That’s why keeping good records is essential.

How to report cryptocurrency gains and income to HMRC

Once you’ve worked out your crypto gains or income, the next step is reporting it to HMRC. You’ll usually do this through a Self Assessment tax return. When you fill in your return, include:

  • The type of crypto activity, whether buying, selling, earning or mining
  • The dates of each transaction
  • The value in pounds when you bought and sold
  • Any costs involved, like transaction or gas fees

HMRC expects your figures to be accurate and supported by clear records or exchange statements. If you’re declaring crypto income, include it under other income or your self-employment section, whichever applies.

Deadlines matter too. Missing one can mean penalties or interest on late payments. If you’re unsure where to start, our guide to Self Assessment tax returns walks you through what to include and how to submit everything correctly.

Deadlines for crypto tax reporting

HMRC follows the same tax calendar for crypto as for everything else. The deadline to file your Self Assessment and pay any crypto tax is 31 January after the end of the tax year.

If you miss the deadline, HMRC can charge penalties and interest, even if you only owe a small amount. Keep good records throughout the year, including dates, wallet addresses and transaction values. It makes life a lot easier when it’s time to file.

And remember that RIFT can help you report your crypto tax in the UK accurately and on time, so you don’t have to stress about the paperwork.

Crypto tax rebates and reliefs

Paying tax on crypto doesn’t always mean losing out. There are a few ways to reduce your bill or even claim money back, if you know the rules.

Start with your Capital Gains Tax (CGT) allowance. For 2024/25, you can make up to £6,000 in gains before paying any CGT. If your total gains stay below that, you won’t owe tax.

If your investments didn’t go to plan, don’t panic, losses can work in your favour. You can offset crypto losses against future gains to lower what you owe. Just make sure you report those losses to HMRC within four years of the tax year they happened.

In some cases, you might even be due a refund. RIFT can help check your figures, reclaim overpaid tax and make sure you’re using every allowance you’re entitled to. We’ve helped thousands of people get their money back and we can do the same for your crypto tax too.