UK Crypto, NFT and Token Tax 2026/27: CGT and Income Rules

How HMRC Classifies Crypto Assets

HMRC does not consider Bitcoin, Ether or any other token to be currency or money. Its position, set out in the Cryptoassets Manual, is that they are capital assets held as property. That single classification drives almost every UK tax rule for crypto holders.

Because crypto is property, any disposal is a CGT event. A disposal includes:

• Selling crypto for sterling or any other fiat currency
• Swapping one crypto for another (for example, trading ETH for SOL)
• Spending crypto to buy goods or services
• Gifting crypto to someone other than a spouse or civil partner
• Transferring crypto out of a wallet in exchange for something of value

Transfers between wallets you own are not disposals and do not trigger CGT -- but you must keep records so you can prove ownership and trace the cost basis.

CGT Rates and the Annual Exempt Amount in 2026/27

The Annual Exempt Amount (AEA) for individuals in 2026/27 is GBP 3,000. This has fallen sharply from GBP 12,300 in 2022/23, so many more people now owe CGT on what were previously small gains.

CGT rates on crypto match the rates for other assets (excluding residential property):

• Basic-rate taxpayers: 18% on gains that fall within the basic-rate band
• Higher and additional-rate taxpayers: 24% on gains above the basic-rate band

To work out which rate applies, add your total taxable income to your total net chargeable gains (after the GBP 3,000 AEA). If the combined figure exceeds the basic-rate limit of GBP 50,270, the portion above that threshold is taxed at 24%.

For example, if your employment income is GBP 40,000 and you have net crypto gains of GBP 20,000 after the AEA, the first GBP 10,270 of gains falls in the basic-rate band (taxed at 18%) and the remaining GBP 9,730 is in the higher-rate band (taxed at 24%).

Use the CalcHub Capital Gains Tax Calculator to model different disposal scenarios before the tax year ends.

The S104 Pool and the 30-Day Matching Rule

Unlike shares, crypto cannot be identified lot by lot. Instead HMRC requires you to maintain a Section 104 pool (S104 pool) for each token. Every time you acquire a token, the cost is added to that pool. Every time you sell, a proportionate slice of the pooled cost is deducted.

Example: You buy 1 BTC for GBP 20,000 and later buy another 1 BTC for GBP 40,000. Your S104 pool now holds 2 BTC at an average cost of GBP 30,000 each. If you then sell 1 BTC for GBP 50,000, your gain is GBP 50,000 minus GBP 30,000 = GBP 20,000.

Two priority matching rules apply before the pool:

1. Same-day rule: acquisitions on the same day as a disposal are matched first.
2. 30-day rule (bed-and-breakfasting rule): if you sell tokens and then buy the same token again within 30 calendar days, those reacquired tokens are matched against the sale, not the pool. This stops people from selling at a loss, claiming the loss to offset other gains, and immediately rebuying.

You must maintain separate pools for every token type. Swapping ETH for USDC is a disposal of ETH and an acquisition of USDC -- two separate pool entries.

Staking Rewards, Mining and DeFi Income

Not all crypto tax is CGT. HMRC identifies several activities that generate income rather than capital gains.

Staking rewards: When you receive new tokens as a staking reward, those tokens are taxable as miscellaneous income at the date you receive them. The taxable amount is the market value in sterling on that date. That same value becomes your cost basis for the CGT calculation when you eventually sell.

Proof-of-work mining: If you mine crypto commercially (for profit, with significant infrastructure), HMRC is likely to treat the activity as a trade. Mining income is trading income subject to Income Tax and Class 4 National Insurance. If mining is not commercial -- a hobbyist running a small rig -- the receipts are miscellaneous income instead.

DeFi lending and liquidity pools: Providing liquidity to a DeFi protocol in exchange for yield or fees is generally treated as income at the point of receipt. Whether the underlying deposit itself triggers a CGT disposal depends on whether HMRC views the transfer as a genuine disposal or simply a change in how the asset is held. This area remains legally uncertain, so keeping clear records is essential.

Airdrops: Tokens received in an airdrop with no conditions attached may be treated as having GBP 0 income value (though the point is contested). Tokens received in exchange for a service or as part of a promotion are income at receipt. Always check the specific circumstances.

NFT Sales: CGT for Investment Holdings

NFTs (non-fungible tokens) are treated in the same way as other crypto assets for tax purposes. If you buy an NFT as an investment and later sell it for more than you paid, the profit is a capital gain. The same AEA of GBP 3,000 and CGT rates of 18%/24% apply.

If you create and sell NFTs as part of a trade -- for example, you are a digital artist selling your own work -- the income is trading income, subject to Income Tax at your marginal rate and, potentially, Class 4 NI. The distinction between investor and trader depends on the badges of trade: frequency of transactions, profit motive, modification of assets before sale and holding period.

If you are buying and flipping NFTs regularly for profit, HMRC may argue you are trading rather than investing, which removes the CGT treatment and replaces it with Income Tax.

Record-Keeping and Reporting Obligations

HMRC expects you to keep full records of every transaction:

• Date of acquisition and disposal
• Description of the asset and number of units
• Value in sterling at the time of each transaction (supported by a reliable price source)
• Wallet addresses and exchange account details
• Fees paid (which may be allowable costs)

You must report crypto gains on a Self Assessment tax return. The deadline for online returns is 31 January following the tax year end. You must report if your total disposal proceeds exceed GBP 50,000 OR if you have gains above the GBP 3,000 AEA -- even if no tax is payable because losses wipe out the gain.

Losses can be carried forward indefinitely to offset future gains, but they must be formally claimed on a tax return within four years of the tax year in which they arose.

Practical Steps Before 5 April 2027

If you hold significant crypto positions, consider these steps before the end of the 2026/27 tax year:

1. Crystallise losses: If you hold tokens sitting at a paper loss, disposing of them before 5 April 2027 locks in losses you can set against other gains. Remember the 30-day rule -- if you want to rebuy, wait more than 30 days or swap to a different token.
2. Use your AEA: The GBP 3,000 AEA cannot be carried forward. If you have gains under GBP 3,000, disposing of assets and using the allowance each year is efficient tax planning.
3. Spouse transfers: Transfers between spouses and civil partners are CGT-free (no-gain, no-loss). If one partner pays a lower rate of CGT, transferring assets before disposal can reduce the overall bill.
4. Pension contributions: Making pension contributions increases your basic-rate band, potentially bringing more gains into the 18% rate rather than 24%.

Use the CalcHub Capital Gains Tax Calculator to run the numbers for your own position before making disposal decisions.

Reporting Crypto on Self Assessment

If you need to file Self Assessment for the first time because of crypto, you must register with HMRC by 5 October following the end of the tax year. The SA100 main return and SA108 (Capital Gains) pages cover crypto disposals. Many crypto exchanges produce annual transaction reports -- download these early and reconcile them against your own records.

HMRC has used data-sharing agreements with exchanges and blockchain analytics to identify non-compliant taxpayers. Failure to declare gains can result in tax-geared penalties of up to 100% of the unpaid tax, plus interest.

With the AEA now at just GBP 3,000 and CGT rates up to 24%, even moderate crypto investors are likely to have a reporting obligation. Getting your records in order now makes the Self Assessment process straightforward.