UK Crypto Tax 2026/27: Capital Gains, Staking, Mining and HMRC Rules

How Does HMRC Tax Cryptocurrency?

HMRC does not treat cryptocurrency as currency or money. Instead, it treats crypto assets as property for tax purposes. This has two key implications:

1. When you dispose of crypto, Capital Gains Tax (CGT) may apply
2. When you receive crypto as income (staking, mining, airdrops, payment for services), Income Tax applies

HMRC published its first cryptocurrency tax guidance in 2018 and has updated it several times since. The rules are now well-established, and HMRC is actively identifying crypto holders through data requests to exchanges.

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What Counts as a "Disposal" for CGT?

A disposal is any event that triggers a capital gain or loss calculation. For crypto, disposals include:

• Selling crypto for pounds sterling (or any fiat currency)
• Swapping one crypto for another (e.g. BTC to ETH)
• Using crypto to buy goods or services
• Gifting crypto to someone other than your spouse or civil partner
• Losing access to crypto permanently (in certain circumstances)

Note: Moving crypto between your own wallets is not a disposal.

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Capital Gains Tax Rates on Crypto in 2026/27

From 30 October 2024, the capital gains tax rates on assets (including crypto) were changed:

The rates for crypto follow the residential property rates introduced in the Autumn Budget 2024, having been raised from the old 10%/20% rates.

Annual Exempt Amount

The CGT annual exempt amount for 2026/27 is £3,000. This means your first £3,000 of net gains in the tax year are completely tax-free. If your total net gains from all assets (crypto, shares, property etc.) are below £3,000, you have no CGT liability and no need to report (though you may still wish to report losses).

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How to Calculate Your Crypto Capital Gain

The gain on a crypto disposal is:

Gain = Disposal proceeds - Cost basis (acquisition cost)

Your acquisition cost includes the price you paid plus any transaction fees paid in fiat to acquire the crypto.

The S104 Pool (Share Pooling)

UK tax law requires you to pool identical crypto assets into a "Section 104 pool." Rather than tracking each individual coin or token, you maintain a running average cost across all your holdings of that asset.

Example:

• January 2024: Buy 1 BTC for £30,000

• June 2024: Buy 0.5 BTC for £20,000 (£40,000/BTC equivalent)

• Pool: 1.5 BTC at a total cost of £50,000 -- average cost = £33,333/BTC

• March 2026: Sell 0.5 BTC for £40,000

• Cost basis: 0.5 x £33,333 = £16,667

• Gain: £40,000 - £16,667 = £23,333

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The Same-Day Rule and the 30-Day Rule

HMRC has two anti-avoidance matching rules that override the pool in some circumstances:

Same-Day Rule

If you buy and sell the same crypto on the same day, the buy and sell are matched against each other first, before looking at the pool.

30-Day Rule (Bed and Breakfasting)

If you sell crypto and then buy the same type within 30 days after the sale, those buys are matched to the sale first -- before the pool is used. This prevents you from "crystallising" a loss by selling and rebuying quickly, then continuing to hold.

Example of the 30-day rule in action:

• You hold 1 ETH with a pool cost of £500
• ETH price falls to £800 -- you sell for £800 (gain = £300 under pool)
• Wait... actually you want to "bank" a loss. But if ETH had fallen to £400 and you sell for £400, you'd have a loss of £100.
• If you rebuy within 30 days, the sale matches the new purchase, not the pool.

This matters most when trying to manufacture losses to offset gains. Always check whether a rebuy falls within the 30-day window.

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Staking Rewards: Income Tax

If you receive cryptocurrency as a reward for staking your existing holdings, HMRC generally treats these rewards as income at the point they are received.

• You pay Income Tax on the value in pounds at the date of receipt
• That value also becomes your cost basis for CGT when you later sell the staking rewards
• The income is reported under "miscellaneous income" on your Self Assessment return

There is some nuance: HMRC accepts that in some cases staking rewards may not be income if they are purely compensatory (e.g. for locking up coins with no guarantee of return). However, the default position is that staking rewards are taxable income.

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Mining: Income or Trading?

Cryptocurrency mining is treated as a trade if it is carried on in an organised, commercial manner -- meaning profits are taxed as self-employment income, with allowable deductions for electricity, equipment depreciation and hosting costs.

For casual hobby miners, HMRC treats the mined crypto as miscellaneous income at the value received. Either way, when you later sell the mined coins, any growth from the income value to the sale price is a capital gain.

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Airdrops and Hard Forks

Airdrops

If you receive an airdrop (tokens sent to your wallet for free, perhaps for holding another coin):

• If no service was performed in exchange: usually no income tax at receipt (but capital gains apply when sold)
• If the airdrop was received in exchange for a service or action (e.g. signing up, promoting a project): treated as income at the value received

Hard Forks

When a blockchain forks and you receive new coins, HMRC treats them as having a nil cost basis (you acquired them for nothing). When you sell, the full proceeds are a gain -- unless you can demonstrate some other acquisition cost.

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DeFi: Lending, Liquidity Pools and Yield

Decentralised finance (DeFi) is an area HMRC is actively developing guidance on. Current HMRC guidance suggests:

• DeFi lending: Depositing crypto in a lending protocol and receiving interest -- interest is taxable income
• Liquidity pools: Depositing crypto into a pool (e.g. Uniswap) may constitute a disposal at the point of deposit, and re-receipt on withdrawal may be a new acquisition -- generating potential CGT events at each step
• Yield farming / liquidity mining rewards: Treated as income at the point of receipt

HMRC's specific DeFi guidance is evolving. If you are actively using DeFi protocols with significant sums, specialist tax advice is recommended.

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Record-Keeping Requirements

HMRC requires you to keep records of every transaction, including:

• Date of each transaction
• Type of transaction (buy, sell, swap, receive as income)
• Amount of crypto involved
• Value in pounds sterling at the date of the transaction
• Transaction fees (in fiat)
• Details of the sending/receiving wallets
• Exchange statements or blockchain records

Without these records, calculating accurate gains and losses -- and defending your position in an enquiry -- becomes extremely difficult. There are several crypto tax software tools (Koinly, Accointing, Cointracker, TaxScouts) that can import from exchanges and wallets and automatically calculate UK-compliant gains.

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Reporting Crypto Gains to HMRC

If You Need to Report

You must report crypto gains on a Self Assessment tax return if:

• Your total gains exceed £3,000 in 2026/27, or
• Your total crypto proceeds exceed £50,000 even if gains are below the exempt amount, or
• You are already filing a Self Assessment return for other reasons

Deadline

• Paper return: 31 October 2026
• Online return: 31 January 2027

Reporting Losses

Even if you made a loss overall, report it -- crypto losses can be offset against gains from other assets (shares, property) and can be carried forward indefinitely to offset future gains. Losses must be claimed within 4 years of the end of the tax year in which they arose.

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Key Numbers for 2026/27

Crypto tax in the UK is more complex than many people realise, but the rules are clear once you understand them. Accurate record-keeping from the start makes the process manageable -- trying to reconstruct years of transactions from scratch is extremely time-consuming.