Crypto Tax UK 2025/26: Everything HMRC Now Checks

Quick answer

UK crypto tax in 2025/26 is broadly:

Annual CGT exemption £3,000 (2025/26). Above that, 18% (basic) / 24% (higher) on gains.

CGT on disposals

A disposal of crypto triggers CGT. The key formula:

Gain = Disposal proceeds (£) - Acquisition cost (£) - Allowable expenses

Allowable expenses include exchange fees, gas fees and similar transaction costs at the time of acquisition or disposal.

Worked example — Lisa, three disposals in 2025/26

Lisa's transactions:

1. March 2024: bought 2 ETH at £1,800 each = £3,600 (+ £20 fees) → total cost £3,620.
2. September 2025: sold 1 ETH for £2,900 (- £30 fees) → net proceeds £2,870.
3. November 2025: swapped 1 ETH for SOL when ETH was worth £3,100 → disposal proceeds £3,100.

Pool average for ETH: total cost £3,620, total holdings 2 ETH → average £1,810/ETH.

Disposal 1 (Sept 2025): £2,870 - £1,810 = £1,060 gain. Disposal 2 (Nov 2025): £3,100 - £1,810 = £1,290 gain.

Total 2025/26 gains: £2,350. Annual exemption: £3,000. Taxable gain: £0.

Lisa stays within her annual exemption — no CGT due. She still needs to report on Self Assessment if her total proceeds exceeded £50,000 (they didn't here at £5,970) OR if she's already filing Self Assessment for other reasons.

The SOL she received has a cost basis of £3,100 for future disposals.

Pooling rules

UK crypto follows "Section 104 pooling" — same as listed shares.

• All units of the same coin/token form a single pool with averaged cost.
• You can't claim FIFO ("first in, first out") or LIFO ("last in, first out").
• Each disposal uses the pool average as cost basis.

The 30-day "bed and breakfast" rule

To prevent gaming the £3,000 exemption:

• Crypto re-acquired within 30 days of a disposal is matched against that disposal first (not the pool).
• Stops the trick of selling to crystallise gains, then immediately re-buying.

Workaround: wait 31+ days, or buy a different crypto, or buy within an ISA wrapper if your platform supports it (rare for crypto).

"Same-day" rule

Disposals on the same day as acquisitions of the same coin match those acquisitions first. Rare but matters if you trade actively.

Income tax events

Some crypto events are income tax, not CGT:

Staking rewards

Each reward received is taxable income at the £ value on the day of receipt:

• Taxed at your marginal rate (20% / 40% / 45%).
• Adds to your annual income for tax-band purposes.
• The £ value of the reward becomes the cost basis for future CGT when you sell.

Mining

If you mine crypto:

• Hobby miner (small scale, occasional): rewards are miscellaneous income.
• Trading mining (organised, profit-seeking, significant scale): treated as a trade — income tax + Class 2/4 NI.

Airdrops

• Unexpected airdrop received passively (just for holding a coin): usually NOT taxable on receipt; cost basis is £0.
• Airdrop received for action (sign-up, social media task, providing services): income tax at £ value at receipt.

The line is fuzzy in practice; HMRC's Cryptoasset Manual provides specific guidance per case.

Hard forks

When a hard fork creates a new coin (e.g. Bitcoin Cash from Bitcoin):

• The new coin's pool starts with a cost basis allocated proportionally from the original pool.
• Not immediately taxable.

Reporting on Self Assessment

You must report crypto on Self Assessment if either:

• Total proceeds (gross disposals) exceeded £50,000, OR
• Total gains exceeded the £3,000 exemption.

For high-volume traders (hundreds of disposals per year), use crypto tax software:

• Koinly — most popular UK option. £39-£199/yr depending on transaction count.
• Recap — UK-focused, £79+/yr.
• CoinTracker — global, GBP-aware. £59+/yr.
• CryptoTaxCalculator — Australian-origin but UK-supportive.

These platforms:

1. Connect to your exchanges via API or wallet addresses.
2. Apply UK pooling rules automatically.
3. Output a Self Assessment-ready summary (proceeds, costs, gains by category).
4. Some integrate directly with HMRC filing.

January 2025 — HMRC platform reporting

A major change: from 1 January 2025, UK and EU crypto exchanges must report user data to HMRC under the OECD Crypto-Asset Reporting Framework (CARF).

Exchanges affected include:

• Coinbase (UK and global).
• Binance UK / Binance.
• Kraken UK.
• Bitstamp.
• Gemini UK.
• Most other UK-registered or EU-licensed exchanges.

What HMRC sees:

• Your identity (name, address, NI number).
• Total annual proceeds in £.
• Total annual acquisitions in £.
• Wallet addresses linked to the account.
• Transaction-level data on disposals.

HMRC cross-references this against your Self Assessment. Mismatches trigger:

• Nudge letters in the first instance ("we believe you have crypto activity you've not declared").
• Formal enquiries if not corrected.
• Penalties for careless errors (15-30% of tax) or deliberate concealment (35-100%).

The "voluntary correction" window

If you haven't declared crypto in past years and want to come clean:

• File amended Self Assessment for affected years (within 12 months of original deadline).
• Or use HMRC's voluntary disclosure facility — Worldwide Disclosure Facility or general disclosure.
• Penalties are lower when you self-correct vs HMRC catching you.

This is genuinely time-sensitive — HMRC's nudge letters started in earnest mid-2025 and ramped up in 2026.

Decentralised finance (DeFi) — the tricky cases

UK guidance on DeFi has tightened:

Liquidity pool deposits

Adding tokens to an AMM liquidity pool (Uniswap, etc.):

• HMRC sometimes treats as a disposal if you receive LP tokens in exchange.
• The character of LP tokens varies by protocol.
• Withdrawal from the pool is another disposal/acquisition.

Lending / yield farming

• Interest received = income tax at receipt £ value.
• Underlying loan principal: not disposed if you receive the same coin back.

Wrapped tokens

• Wrapping BTC → wBTC: usually NOT a disposal (same underlying asset).
• But: case law evolving. Conservative approach is to log as a disposal if you're risk-averse.

NFTs

NFTs are CGT assets:

• Sell NFT for ETH: CGT event on NFT, ETH proceeds at market value.
• NFT minted from your own creation: if you mint and sell as part of a creative trade, income tax. If hobby/casual, CGT.
• NFT received in airdrop: usually CGT-only, cost basis = £0.

Crypto losses

Crypto losses can offset gains:

• Same-year offset: automatic.
• Carry-forward indefinitely (must claim within 4 years of the loss year on Self Assessment).
• Negligible value claim for tokens that have collapsed to ~zero — treat as disposal for £0.

The Terra/Luna collapse, FTX bankruptcy, and various rug-pulls have left many UK holders with substantial negligible-value claims. File them.

Common mistakes

1. Not declaring crypto-to-crypto swaps. Each swap is a disposal.
2. Using FIFO instead of pool average. HMRC requires Section 104 pooling.
3. Forgetting the 30-day rule. Wash-sale-style re-buying breaks loss claims.
4. Not declaring staking rewards — income tax events, not just CGT.
5. Assuming HMRC won't notice — since January 2025, they almost certainly do.
6. Missing CGT 60-day reporting for crypto-funded UK property purchases (very rare but documented cases).

What to do if you've never declared

1. Get a crypto tax software report for affected years.
2. Quantify the gains and tax owed.
3. If under £10,000 of unpaid tax: file an amended Self Assessment for the relevant year(s) and pay the balance.
4. If over £10,000 or multiple years: consider HMRC's Worldwide Disclosure Facility with professional advice. Penalty reductions for voluntary correction are typically 50% of what HMRC would impose if they found you.
5. Going forward: file annually, use software, keep records.

Try the numbers

For overall tax position including crypto income:

Sources

• HMRC: Cryptoassets Manual (CRYPTO10000)
• HMRC: Tax on cryptoassets
• HMRC: Capital Gains Tax: detailed information
• OECD: Crypto-Asset Reporting Framework (CARF)
• gov.uk: Worldwide Disclosure Facility