Cryptocurrency has become a popular investment vehicle in the UK, with more individuals and businesses engaging in trading, staking, mining, and other crypto-related activities. However, as the crypto market grows, so does the scrutiny from HM Revenue & Customs (HMRC). Understanding and complying with HMRC’s crypto tax rules is essential to avoid penalties, fines, or legal issues. 

This guide will walk you through everything you need to know about crypto taxes in the UK, including taxable events, how to calculate your liabilities, and how Tax My Crypto can help simplify the process. 

Why Does HMRC Tax Cryptocurrency? 

HMRC classifies cryptocurrency as a form of property rather than traditional currency. This means that crypto transactions are subject to either Capital Gains Tax (CGT) or Income Tax, depending on the nature of the activity. 

With the self-assessment tax deadline for the 2024–25 tax year approaching on 31 January 2026, it’s crucial for UK investors to stay informed and compliant. 

What Crypto Activities Are Taxable in the UK? 

HMRC considers the following activities as taxable events: 

1. Selling Cryptocurrency for Fiat Currency 

   Example: Selling Bitcoin for GBP. 

   Tax Type: Capital Gains Tax (CGT). 

2. Exchanging One Cryptocurrency for Another 

Example: Swapping Ethereum for Solana. 

Tax Type: Capital Gains Tax (CGT). 

3. Using Cryptocurrency to Pay for Goods or Services 

Example: Spending Bitcoin to buy a car. 

Tax Type: Capital Gains Tax (CGT). 

4. Gifting Cryptocurrency 

Example: Gifting crypto to anyone other than your spouse or civil partner. 

Tax Type: Capital Gains Tax (CGT). 

5. Earning Cryptocurrency as Income 

Example: Mining rewards, staking rewards, airdrops, or crypto received as payment for goods or services. 

Tax Type: Income Tax. 

Capital Gains Tax (CGT) on Cryptocurrency 

When Does CGT Apply? 

CGT applies whenever you dispose of a cryptoasset by selling, trading, or using it to pay for goods or services. 

CGT Allowances for 2024/25 and 2025/26 

The Annual Exempt Amount (AEA) determines how much profit you can make before CGT is applied: 

2024/25 Tax Year: £3,000. 

2025/26 Tax Year: £1,500 (projected, subject to HMRC confirmation). 

CGT Tax Rates 

The rate of CGT depends on your income level: 

Basic Rate Taxpayers: 10%. 

Higher and Additional Rate Taxpayers: 20%. 

How to Calculate CGT 

To calculate CGT: 

1. Subtract the acquisition cost of the cryptoasset from its disposal value. 

2. Deduct any allowable expenses, such as transaction fees. 

3. Apply the relevant tax rate based on your income. 

Example Calculation: 

• Purchase Price: £10,000. 
• Sale Price: £20,000. 
• Gain: £20,000 – £10,000 = £10,000. 
• Allowable Exemption (2024/25): £3,000. 
• Taxable Gain: £10,000 – £3,000 = £7,000. 

For a basic rate taxpayer: 

CGT Liability: £7,000 x 10% = £700. 

Income Tax on Cryptocurrency 

When Does Income Tax Apply? 

Income tax applies to earnings from cryptocurrency, including: 

• Mining Rewards: Income from mining cryptocurrencies. 
• Staking Rewards: Earnings from proof-of-stake blockchains. 
• Airdrops: Free crypto distributed as part of marketing campaigns. 
• Payments in Cryptocurrency: Receiving crypto as payment for goods or services. 

Income Tax Rates 

• Basic Rate: 20%. 
• Higher Rate: 40%. 
• Additional Rate: 45%. 

The value of the crypto in GBP at the time of receipt must be declared as taxable income. 

How Tax My Crypto (taxmycrypto.io) Can Help 

At Tax My Crypto, we specialize in simplifying crypto tax compliance for UK investors. Our team of experts combines in-depth knowledge of HMRC regulations with advanced tools to ensure your tax reporting is accurate, compliant, and stress-free. 

Here’s how we can assist you: 

1. Comprehensive Tax Reporting 

We provide detailed tax reports, including Capital Gains Tax summaries and income breakdowns, tailored to HMRC requirements. 

2. Expert Guidance 

Our team offers personalized advice to help you understand your tax obligations and optimize your reporting. 

3. Transaction Analysis 

We analyze your crypto transactions to identify taxable events and calculate your liabilities accurately. 

4. Self-Assessment Support 

We assist with the preparation and submission of your self-assessment tax return, ensuring you meet the 31 January deadline.  

5. Audit-Ready Records 

We help you maintain organized and accurate records, preparing you for any HMRC inquiries or audits. 

Key Takeaways for UK Crypto Investors 

1. Crypto Transactions Are Taxable: Gains are subject to CGT, and earnings are subject to Income Tax. 

2. Annual Exempt Amount: The CGT allowance is £3,000 for 2024/25 and may decrease in future years. 

3. Seek Professional Help: Companies like Tax My Crypto simplify tax reporting and ensure compliance. 

4. File on Time: Report all disposals and income in your self-assessment tax return by the 31 January deadline. 

5. Keep Accurate Records: Maintain detailed transaction records to avoid errors and penalties. 

Need Help with Your Crypto Taxes? 

Navigating crypto taxes can be overwhelming, but you don’t have to do it alone. Tax My Crypto is here to help. 

Contact us today to simplify your crypto tax compliance and stay on the right side of HMRC regulations