HMRC has made its position clear: cryptocurrency is a capital asset, and virtually every transaction is a taxable event. With the CGT annual allowance slashed to £3,000 in 2026 and HMRC receiving transaction data directly from UK-registered exchanges, the days of treating crypto gains as off-radar income are over. This guide breaks down exactly what you owe, when, and how to report it correctly.
The Core Rule: Every Disposal Is Taxable
HMRC defines a "disposal" broadly. The following all trigger a capital gains calculation:
- Selling crypto for GBP or any other fiat currency
- Trading one cryptocurrency for another (BTC → ETH is a disposal of BTC)
- Spending crypto on goods or services
- Gifting crypto to anyone other than a spouse or civil partner
- Losing crypto to a confirmed scam (may qualify as a capital loss — requires HMRC approval)
Not taxable at the point of transaction: transferring crypto between your own wallets, buying crypto with GBP, or simply holding.
Capital Gains Tax Rates and Allowances for 2026
| Taxpayer Status | CGT Rate on Crypto | Annual CGT Allowance |
|---|---|---|
| Basic rate taxpayer | 18% | £3,000 |
| Higher / additional rate taxpayer | 24% | £3,000 |
| Couples (spouse transfer exempt) | — | £6,000 combined |
CGT rates on crypto were aligned with residential property rates in the 2025 Autumn Statement, rising from the previous 10%/20% bands. This makes accurate record-keeping even more valuable — losses can be offset against gains within the same tax year or carried forward indefinitely.
Section 104 Pooling: The UK Cost Basis Method
Unlike the U.S. (FIFO/HIFO) or Australia (parcel method), the UK requires Section 104 pooling. Every time you buy the same asset, the new purchase is pooled with all prior purchases and a new average cost is calculated. When you sell, you use the pool's average cost — not the cost of any specific lot.
Important exceptions that take priority over the pool:
- Same-day rule: If you buy and sell the same asset on the same day, the buy cost is matched against the same-day sale first.
- Bed-and-breakfasting rule (30 days): If you sell an asset and buy it back within 30 days, HMRC matches the repurchase against the sale — preventing "wash sale" loss harvesting.
Most tax software (Koinly, CryptoTaxCalculator, TaxBit UK) handles Section 104 automatically, but it's worth verifying — some tools default to FIFO unless explicitly configured for UK rules.
Income Tax: Staking, Mining, and Airdrops
Not all crypto income is subject to CGT. Activities that generate new coins are typically treated as income at the market value on the date of receipt, then subject to CGT on any subsequent gain from that baseline:
- Staking rewards: Taxed as miscellaneous income when received. If you later sell the staked coins, CGT applies on any gain from the receipt price.
- Mining income: Hobbyist miners pay income tax; commercial operations may be treated as trading income subject to different rules.
- Airdrops: If received in return for a service, taxed as income. If received with no obligation, may be outside the scope of income tax but CGT applies on disposal.
- DeFi yield and lending interest: HMRC's position remains that this constitutes taxable income; the specific treatment of complex DeFi transactions is an evolving area.
Self-Assessment Reporting: Deadlines and Thresholds
You must file a Self-Assessment tax return if your crypto gains or income exceed the reporting thresholds:
- Capital gains threshold: Total gains exceeding £3,000, OR total proceeds exceeding £49,200 (even if no net gain), require reporting.
- Income threshold: Any staking, mining, or airdrop income must be reported through Self-Assessment if you are not already registered.
- Filing deadline: 31 January 2027 for online Self-Assessment covering the 2025/26 tax year (6 April 2025 – 5 April 2026).
- Paper return deadline: 31 October 2026 (paper returns are rare; online is strongly recommended).
Practical Steps: How to Prepare
1. Export all transaction history from every exchange and wallet used in 2025/26. Most FCA-registered UK exchanges provide CSV exports; hardware wallet users should use blockchain explorers or portfolio trackers.
2. Use UK-compliant tax software — specifically tools that implement Section 104 pooling with same-day and 30-day rules correctly. Koinly and CryptoTaxCalculator both offer dedicated UK modes.
3. Record GBP values at the time of each transaction. HMRC accepts reasonable sources such as CoinMarketCap or CoinGecko for historical prices.
4. Identify loss-harvesting opportunities. Crystallising losses before 5 April 2026 and carrying them forward can reduce future CGT bills — subject to the 30-day bed-and-breakfasting rule.
5. Consider a crypto-specialist accountant if your portfolio includes DeFi, NFTs, or complex derivative positions — HMRC's guidance in these areas is still evolving and errors are costly.
HMRC Data-Sharing: What Exchanges Are Reporting
Under the OECD's Crypto-Asset Reporting Framework (CARF), UK-registered exchanges now share transaction data with HMRC automatically. This includes account holder identity, total transaction volume, and disposal proceeds. HMRC cross-references this data against Self-Assessment returns — undeclared gains are increasingly detectable. The penalty for failure to declare can reach 100% of the unpaid tax plus interest.
For official guidance, visit HMRC's Cryptoassets Manual. To register for Self-Assessment, visit gov.uk/self-assessment.