UK Crypto Taxes 2026: Complete Guide to Rules, Rates, and Reporting

Crypto Taxes in the United Kingdom: The Complete 2026 Guide

 

Quick Summary

The UK does not treat cryptocurrency as currency but as a taxable asset. HMRC applies Capital Gains Tax (CGT) to disposals of crypto and Income Tax to activities such as mining, staking, airdrops, employment payments, and certain DeFi rewards. Detailed rules are outlined in the official HMRC Cryptoassets Manual and the guidance on paying tax on cryptoassets. Whether you are a casual investor or an active trader, accurate record-keeping and correct reporting via self-assessment are essential.

 

How the UK Classifies Cryptocurrency for Tax Purposes

 

Crypto as a Capital Asset (Not Currency)

HMRC states that cryptoassets are not considered currency or gambling winnings. Instead, most individuals fall under the capital gains tax framework because crypto is treated as an investment asset. Each disposal—including sales, swaps, and spending—is taxable.

 

Key Legal Framework

UK crypto taxation is guided by:

• HMRC Cryptoassets Manual (CRYPTO Manual)
• Capital Gains Tax legislation governing digital asset disposals
• Income Tax rules for earnings from mining, staking, and employment

 

Taxable Crypto Events in the United Kingdom

 

1. Selling Cryptocurrency for Fiat

Any sale of crypto for GBP or another fiat currency triggers Capital Gains Tax. Gains or losses must be calculated using the allowable cost, including fees.

 

2. Trading Crypto for Crypto

Crypto-to-crypto swaps are taxable disposals under CGT rules. Each trade requires valuation in GBP at the time of the transaction.

 

3. Spending Crypto on Goods or Services

Using crypto for purchases (online or in-store) results in a disposal that may generate a taxable gain or loss.

 

4. Receiving Crypto as Income

Income tax applies when crypto is received through:

• Mining
• Staking
• Airdrops with conditions or work performed
• Salary or freelance payments
• Rewards from certain DeFi protocols

The fair market value in GBP on the day received is treated as taxable income, and future disposals may trigger CGT.

 

5. Professional Trading Classification

In rare cases, if crypto trading activity resembles a business, HMRC may classify profits under Income Tax instead of CGT, though this is uncommon for individual investors.

 

Capital Gains Tax Rates on Crypto in the UK

 

Annual CGT Allowance

The standard CGT-free allowance has been significantly reduced:

• £3,000 per tax year (as of 2024–2025)

Only gains above this amount are taxable.

 

CGT Rates

Your CGT rate depends on your income tax band:

• 10% for basic-rate taxpayers
• 20% for higher and additional-rate taxpayers

These rates apply to crypto because HMRC categorises it under “other chargeable assets.”

 

Income Tax on Crypto Earnings

 

What Counts as Crypto Income?

• Mining and staking rewards
• Employment or freelance payments in crypto
• Airdrops received in exchange for actions or services
• DeFi rewards treated as income

Income tax bands apply (20%, 40%, or 45%) depending on total earnings. National Insurance Contributions (NICs) may also apply for employment or self-employment income.

 

Reporting Requirements for Crypto in the UK

 

Self Assessment Tax Return

Crypto investors must file a Self Assessment return if they:

• Realise capital gains above the annual allowance
• Have crypto income exceeding £1,000
• Need to report gains even below the allowance (depending on total disposals)

 

When Tax Payments Are Due

Key UK tax deadlines:

• 31 January – Self Assessment filing deadline
• 31 January – CGT and Income Tax payment deadline

 

Record-Keeping Obligations

HMRC requires detailed crypto transaction logs, including:

• Dates of acquisitions and disposals
• GBP values at each event
• Wallet addresses
• Exchange statements
• Fees and costs

 

How Losses on Crypto Are Treated

 

Offsetting Crypto Losses

Losses can be claimed to offset capital gains. Once reported, capital losses can be carried forward indefinitely and used against gains in future tax years.

 

Special Cases: NFTs, Airdrops & DeFi

 

NFT Transactions

NFTs follow CGT rules. Selling, swapping, or gifting an NFT can create a taxable gain or loss.

 

DeFi Activity

HMRC evaluates DeFi transactions based on beneficial ownership. Lending and liquidity activity may count as disposals, while rewards may be classified as income or capital depending on their nature.

 

How to Prepare Crypto Taxes in the UK

 

Tracking Transactions

Accurate transaction records are essential for correct CGT calculations and for categorising income versus capital events. Crypto tax tools can help organise data in HMRC-compliant formats.

 

Using Crypto Tax Tools for the UK

Several platforms support UK-specific tax rules, including share pooling, CGT allowance calculations, and integrating HMRC filing requirements.

 

Penalties for Non-Compliance

 

Failure to declare taxable crypto activity may result in penalties, interest, repayment demands, and possible investigations. HMRC receives data from exchanges and has expanded efforts to identify undeclared crypto gains.

 

Conclusion

 

The UK applies clear tax rules to cryptoassets, categorising most investor activity under Capital Gains Tax while applying Income Tax to crypto earnings. With reduced CGT allowances and increasing HMRC oversight, proper record-keeping and accurate reporting are essential for compliance.

 

References / Sources

 

• Koinly – UK Crypto Tax Guide
• TokenTax – UK Crypto Tax Guide
• HMRC – Pay Tax on Cryptoassets
• HMRC Cryptoassets Manual