Crypto Tax in the UK: What Beginners Need to Know

HMRC is very clear: cryptocurrency is not money and it's not a currency. They treat it as property, which means it's subject to Capital Gains Tax (CGT) when you sell, swap, or spend it.

This means if you buy Bitcoin for £1,000 and later sell it for £2,000, you've made a £1,000 gain — and that gain may be taxable.

You may owe Capital Gains Tax when you:

• Sell cryptocurrency for pounds (or any fiat currency) • Swap one cryptocurrency for another (e.g. BTC to ETH) • Use cryptocurrency to pay for goods or services • Give cryptocurrency to someone (unless it's your spouse or civil partner)

You do NOT owe tax when you:

• Buy cryptocurrency with pounds (this is just an acquisition) • Transfer your own crypto between your own wallets • Donate crypto to a registered charity

Everyone in the UK gets a Capital Gains Tax-free allowance each tax year. For the 2025/26 tax year, this is £3,000.

This means if your total capital gains from ALL sources (crypto, stocks, property, etc.) are below £3,000, you don't owe any CGT. But if your gains exceed this, you'll pay tax on the amount above £3,000.

The CGT rate for most people is 10% (basic rate taxpayers) or 20% (higher rate taxpayers). Note: these rates apply to assets other than residential property.

HMRC requires you to keep records of every crypto transaction for at least 12 months after the Self Assessment deadline for the relevant tax year.

For each transaction, you should record:

• The date of the transaction • The type of transaction (buy, sell, swap) • The amount of cryptocurrency involved • The value in GBP at the time of the transaction • Any fees paid • The running total of your holdings

This is exactly what CryptoWiseHQ's Portfolio HQ is designed to help with — log every trade with timestamps and values to make tax time straightforward.

If you owe Capital Gains Tax, you need to report it via Self Assessment. The deadline for online returns is 31 January following the end of the tax year.

You can report crypto gains in the Capital Gains Tax section of your Self Assessment return. If your only gains are from crypto and they're below £50,000, the process is relatively straightforward.

For complex situations — such as DeFi, staking, airdrops, or mining income — consider consulting a tax professional who understands cryptocurrency.

Many beginners make these errors:

Forgetting that swapping one crypto for another is a taxable event. You don't need to convert back to pounds to owe tax.

Not keeping records from day one. Trying to reconstruct your transaction history a year later is painful.

Assuming small amounts don't count. Even if you're under the threshold, keeping records is good practice and legally required.

Ignoring it entirely. HMRC has been working with exchanges to identify UK taxpayers. Not reporting is not a strategy.