Cryptocurrency Tax UK 2026/27: Capital Gains, Income and What HMRC Actually Sees
HMRC treats most crypto activity as Capital Gains Tax, not a separate 'crypto tax' — but staking rewards, mining and getting paid in crypto are usually taxed as income instead. Here's how the two regimes apply and what exchanges report to HMRC.
The Core Principle: Crypto Is Taxed Like an Asset, Not a Currency
HMRC does not treat cryptocurrency as currency for tax purposes. Instead, for most individual investors, crypto assets are taxed under the existing Capital Gains Tax framework — the same regime that applies to shares, funds and other investments — rather than under any bespoke "crypto tax" regime. This means every disposal event needs to be identified and valued individually.
A "disposal" for crypto tax purposes includes:
- Selling crypto for GBP or another fiat currency.
- Swapping one cryptocurrency for another (e.g. Bitcoin for Ethereum).
- Using crypto to pay for goods or services.
- Gifting crypto to someone other than a spouse or civil partner.
Each of these triggers a capital gain or loss calculation, based on the difference between the GBP value at disposal and your GBP-equivalent base cost.
CGT Rates and Allowance for 2026/27
| Item | 2026/27 Figure |
|---|---|
| Annual CGT exempt amount | £3,000 |
| Basic rate CGT (within basic rate band) | 18% |
| Higher/additional rate CGT | 24% |
Crypto gains are added to your other capital gains (from shares, property, other assets) and measured against the single, shared £3,000 annual exempt amount — it isn't a separate crypto-specific allowance.
Worked Example: Crypto-to-Crypto Swap
Suppose you bought 1 Bitcoin for £20,000 (your base cost), and later swap it for Ethereum when Bitcoin is worth £35,000.
| Step | Amount |
|---|---|
| Disposal value (Bitcoin, at swap) | £35,000 |
| Base cost (original purchase) | £20,000 |
| Capital gain | £15,000 |
| Less annual exempt amount | £3,000 |
| Taxable gain | £12,000 |
| Tax due (higher rate, 24%) | £2,880 |
This tax liability arises even though you never converted to GBP — the swap itself is the taxable event, and the £2,880 is due regardless of what subsequently happens to the Ethereum you now hold (which establishes its own new base cost of £35,000 for future disposals).
When Crypto Income Is Taxed as Income Tax Instead
| Activity | Typical Tax Treatment |
|---|---|
| Selling/swapping crypto held as a personal investment | Capital Gains Tax |
| Staking rewards | Miscellaneous income at receipt (fair market value), then CGT on further growth after receipt |
| Mining (hobby level) | Miscellaneous income at receipt |
| Mining (business level, e.g. dedicated commercial mining operation) | Trading income (Income Tax + Class 4 NI if self-employed) |
| Receiving crypto as employment income/salary | Income Tax + NI through PAYE, same as any other payment in kind |
| Airdrops | Usually income tax if received for doing something (e.g. a service or promotion); sometimes no immediate tax charge if received with no action required, but CGT applies on future disposal either way |
The key distinction: receiving new tokens (staking, mining, airdrops with conditions, employment payment) is often an income event at the point of receipt, valued at GBP market value on that date. Disposing of tokens you already hold as an investment is a capital gains event. The two can both apply to the same tokens over their lifecycle — income tax when received, then CGT on any further gain when eventually sold.
Share Pooling Rules Applied to Crypto
HMRC applies the same share identification rules used for shares to cryptocurrency, with a separate Section 104 pool for each distinct type of token (Bitcoin, Ethereum, and so on are pooled separately, not together):
- Same-day rule — disposals matched first against acquisitions of the same token on the same day.
- 30-day rule — then matched against acquisitions in the following 30 days (relevant for anyone trying to "bed and breakfast" a crypto loss).
- Section 104 pool — remaining disposals matched against the average cost of your entire pooled holding of that specific token.
This means calculating gains accurately requires tracking every acquisition and disposal of each token type chronologically — a genuinely substantial record-keeping task for active traders, which is why dedicated crypto tax software has become common for anyone with more than a handful of transactions.
HMRC Visibility: What Exchanges Actually Report
Assuming crypto transactions are effectively invisible to HMRC is an outdated and risky assumption. Relevant developments include:
- Domestic information requests — HMRC has issued formal requests to UK-operating exchanges for user transaction data, and has sent "nudge letters" to individuals identified through this data where Self Assessment returns appeared incomplete.
- OECD Crypto-Asset Reporting Framework (CARF) — an international standard for automatic exchange of crypto transaction data between tax authorities, which the UK has committed to implementing, extending the reach of cross-border reporting significantly beyond what existed in earlier years.
- Self Assessment crypto question — HMRC's Self Assessment return includes a specific section for reporting crypto asset gains, reinforcing that this is treated as a mainstream, expected disclosure rather than a niche edge case.
Practical Record-Keeping Checklist
- Record the GBP value and date of every acquisition and disposal, including crypto-to-crypto swaps.
- Keep a separate running pool for each distinct token type.
- Note the purpose of receipt for new tokens (staking reward, mining, airdrop, payment) to determine income vs capital treatment.
- Track your cumulative gains against the £3,000 annual exempt amount across all assets, not just crypto.
- Consider dedicated crypto tax software if you have more than a small number of transactions across the year — manual tracking becomes error-prone quickly with active trading or DeFi activity.
Frequently asked questions
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