UK Crypto Tax 2026/27: CGT on Bitcoin, NFTs, DeFi Staking and HMRC Reporting

UK crypto tax framework 2026/27

HMRC published updated crypto tax guidance in 2024, clarifying the tax treatment of crypto assets and transactions. The framework treats crypto as a chargeable asset subject to capital gains tax on disposal, with separate income tax rules for mining, staking and airdrops.

Crypto is a chargeable asset

HMRC explicitly classifies cryptocurrency (Bitcoin, Ethereum, altcoins) as chargeable assets for capital gains tax purposes. This means:

• ✓ Disposal (sell, swap, gift) triggers a CGT event
• ✓ Gain is calculated as market value at disposal minus cost basis
• ✓ Losses can be offset against gains
• ✓ Annual exempt amount (AEA) of GBP 3,000 applies
• ✓ Rates are 18% (basic rate) or 24% (higher rate)

Capital gains tax on crypto disposal

Calculating your CGT gain

Basic formula:

Gain = Market value at disposal - Cost basis (including fees)

Example:

• Purchased 1 Bitcoin at GBP 28,000 in March 2024 (total cost including fees: GBP 28,200)
• Sold 1 Bitcoin at GBP 45,000 in June 2026 (net proceeds after fees: GBP 44,800)
• Gain: GBP 44,800 - GBP 28,200 = GBP 16,600
• Less AEA: GBP 16,600 - GBP 3,000 = GBP 13,600
• CGT (assuming basic rate): GBP 13,600 × 18% = GBP 2,448

Pooling rule (s.104): Cost basis calculation

If you purchase the same crypto multiple times, the s.104 pooling rule applies. All purchases are pooled together, and the average cost is used to calculate your gain on any disposal.

Example: Multiple Ethereum purchases

When you sell 2 ETH in June 2026 at GBP 2,500 each:

• Proceeds: GBP 5,000
• Cost basis (pool avg × 2): GBP 1,967 × 2 = GBP 3,934
• Gain: GBP 5,000 - GBP 3,934 = GBP 1,066

The s.104 pool average is recalculated after each purchase.

Same-day and 30-day anti-avoidance rules

Same-day rule: If you purchase and sell the same crypto on the same day, the specific purchase cost applies (not the pool average). This prevents same-day wash trading.

30-day rule: If you sell crypto at a loss and then repurchase the same crypto within 30 days, the loss is disallowed. This is the UK's crypto equivalent of the bed-and-breakfast rule for stocks.

Example:

• Sell Bitcoin at GBP 20,000 loss (March 2026)
• Repurchase Bitcoin at GBP 18,000 (within 30 days, March 2026)
• Loss disallowed (locked in, cannot be offset against gains)

Mining income and tax treatment

Mining cryptocurrency (proof-of-work consensus) generates income taxed at your marginal income tax rate.

Mining income calculation

Taxable value: The market value of crypto received at the moment of receipt (when you have receipt of the block reward).

Example:

• You receive 0.05 BTC as mining reward in March 2026
• Bitcoin price at receipt: GBP 44,000
• Taxable mining income: 0.05 × GBP 44,000 = GBP 2,200 (assessed at 20/40/45% depending on tax band)

Cost basis for future disposal: The market value at receipt becomes your cost basis. If you later sell that 0.05 BTC at GBP 45,000, your gain is only GBP 1,000 (not GBP 2,200 + subsequent growth).

Self-assessment reporting

Mining income must be reported on Self Assessment. If cumulative mining income exceeds GBP 1,000 in a tax year, you must file a tax return (or register for SA).

Staking income (DeFi proof-of-stake)

HMRC updated guidance in 2024 to clarify staking rewards are taxed as income, not capital gains -- even if rewards are automatically reinvested.

Staking income vs reinvestment

Taxable event: The moment you receive staking rewards (or have the right to receive them, depending on the protocol).

Taxable value: The fair market value at receipt (not at reinvestment).

Example:

• You stake GBP 50,000 worth of Ethereum earning 4% annual reward
• Year 1 reward: 2 ETH received (worth GBP 4,800 at June 2026 prices)
• This is GBP 4,800 staking income (assessed at marginal rate)
• You reinvest the 2 ETH: still GBP 4,800 income (reinvestment does NOT convert to CGT)

Critical point: Staking is income tax (not CGT) regardless of reinvestment.

Staking income reporting threshold

• Income > GBP 1,000 per tax year: Must file Self Assessment
• Income GBP 1,000-2,500: May need to register depending on other income
• Income < GBP 1,000: No reporting required unless Self Assessment already filed

Airdrops and fork coins

Airdrops (free coins received)

Airdrops are treated as income at the fair market value at receipt.

Example:

• You receive 100 new coins from an airdrop (worth GBP 0.50 each)
• Airdrop value: 100 × GBP 0.50 = GBP 50 (income)
• Cost basis for future disposal: GBP 50

If the airdrop has no determinable market value at receipt (illiquid token), HMRC's position is still evolving, but best practice is to record a nil value initially and update when liquid.

Fork coins (blockchain forks creating new coins)

When a blockchain forks (e.g., Bitcoin fork creating Bitcoin Cash), you receive equivalent coins on the new chain.

HMRC treatment (2024 guidance):

• If the fork creates a new asset type: Treated as receipt of income at fair market value
• If the fork is merely a technical change (cosmetic update): No disposal event, no income

Most material forks create new assets and are treated as income. The fair market value at the fork date is your income and cost basis.

NFT tax treatment

NFTs are subject to capital gains tax if disposed at a gain, similar to crypto.

NFT as a chargeable asset

• ✓ Purchase price (including fees/gas) = cost basis
• ✓ Sale price (minus fees/gas) = proceeds
• ✓ Gain subject to CGT at 18%/24%
• ✓ GBP 3,000 AEA applies

NFT chattels exemption (high-value items)

If an NFT is worth > GBP 6,000 at disposal, it is treated as a chattel (tangible property). Chattels have special CGT rules:

• Maximum gain on chattel disposal is limited to GBP 6,000 × (2/3) = GBP 4,000, even if actual gain is higher
• This is the "chattel exemption" (applies to physical tangible items; extended to valuable NFTs by HMRC)

Example:

• Buy NFT (art piece) for GBP 100
• Sell for GBP 10,000
• Chattel exemption applies (> GBP 6,000 disposal value)
• Gain = minimum of (a) actual gain GBP 9,900 or (b) GBP 6,000 × (2/3) = GBP 4,000
• Chargeable gain = GBP 4,000 (not GBP 9,900)
• Less AEA: GBP 4,000 - GBP 3,000 = GBP 1,000
• CGT = GBP 1,000 × 18% = GBP 180

The chattel exemption can save significant CGT on high-value NFTs.

DeFi lending and yield

Interest from DeFi lending (yield farms, liquidity pools)

Interest or rewards from lending crypto in DeFi protocols are taxed as income.

Example:

• Lend 100 USDC to a DeFi protocol earning 8% annual yield
• Annual return: 8 USDC (worth GBP 6 at receipt)
• Taxable income: GBP 6 at marginal rate

Disposal when unlending: When you unwind the position and sell the returned crypto, a CGT event occurs (calculate gain vs cost basis).

Impermanent loss (liquidity pools)

Liquidity pool positions sometimes result in impermanent losses (where the pool value diverges from buy-and-hold). HMRC's treatment of impermanent loss is not yet fully clarified, but current guidance suggests:

• Impermanent loss is NOT a deductible capital loss (because you still hold the LP tokens)
• Only when you withdraw from the pool is a disposal event triggered (at which point you can claim an actual loss if value is lower)

Swap/Exchange transactions

Swapping one crypto for another (e.g., Bitcoin for Ethereum) is a disposal event for CGT.

Example:

• Hold 0.5 BTC (cost GBP 14,000)
• Swap for 7 ETH when BTC = GBP 44,000, ETH = GBP 3,143 each
• Proceeds from disposal: GBP 22,000 (market value of BTC at swap)
• Cost basis: GBP 14,000
• Gain: GBP 8,000
• CGT: (GBP 8,000 - GBP 3,000) × 18% = GBP 900 (basic rate)

The ETH received becomes your new asset with cost basis GBP 22,000 (the market value at swap date).

Gift transactions

Gifting crypto to a friend or family member triggers a CGT disposal event (at market value at gift date).

Example:

• Gift 1 Bitcoin to a friend (cost GBP 28,000, current value GBP 44,000)
• Gain: GBP 44,000 - GBP 28,000 = GBP 16,000
• CGT: (GBP 16,000 - GBP 3,000) × 18% = GBP 2,340
• Recipient: No tax on receipt. Cost basis becomes GBP 44,000 for future disposal.

Gifts to spouses are exempt from CGT (no disposal event), but gifts to anyone else trigger CGT.

HMRC reporting and compliance

Reporting threshold

As of 2026/27, you must notify HMRC if:

• Crypto disposal proceeds exceed GBP 50,000 in a tax year (updated from previous GBP 49,200 threshold)
• Multiple transactions total > GBP 50,000 proceeds (not just single transactions)

Notification must be made to HMRC within reasonable time.

Self Assessment

If you have crypto gains > GBP 0 (after AEA) in a tax year, you must report on Self Assessment, including:

• Total cost basis (all purchases)
• Total proceeds (all disposals)
• Chargeable gain (after losses and AEA)
• Mining/staking income (if any)
• Airdrop income (if any)

Record-keeping requirements

HMRC requires you to keep records for 6 years:

• ✓ Date and value of every purchase
• ✓ Date and value of every sale/disposal
• ✓ Transaction fees and gas costs
• ✓ Mining/staking rewards (date and value)
• ✓ Airdrop receipts (date and value)
• ✓ Wallet addresses and holdings
• ✓ Exchange statements (if applicable)

Common Reporting Standard (CRS)

UK banks and crypto exchanges report crypto holdings to HMRC under Common Reporting Standard. HMRC receives annual reports of all UK resident accounts with crypto holdings > GBP 3,000 (on many platforms).

Implication: HMRC knows what you hold. Ensure your Self Assessment matches exchange records.

Practical compliance checklist

During the tax year:

1. Record all transactions: Date, amount, price, fees
2. Calculate cost basis: Use s.104 pooling for same crypto
3. Track mining/staking: Record date and market value at receipt
4. Track gifts: Record date, recipient, market value for CGT
5. Update your pool: Recalculate average cost after each purchase

At year-end:

1. Calculate total gains/losses: Sum all disposals, apply s.104 pool
2. Offset losses against gains: Can carry forward unused losses
3. Apply AEA: GBP 3,000 annual exemption
4. File Self Assessment: If gains > GBP 0 or income from mining/staking > GBP 1,000
5. Pay CGT/income tax: By 31 January following tax year

Example year-end calculation:

Summary

UK crypto taxation 2026/27 applies capital gains tax to crypto disposal (18%/24% depending on tax band), income tax to mining and staking rewards (marginal rate 20/40/45%), and special rules to NFTs (chattel exemption if > GBP 6,000) and DeFi (interest taxed as income). The s.104 pooling rule determines cost basis. HMRC reporting is required if proceeds exceed GBP 50,000 or if gains/income exceed reporting thresholds. Keep 6 years of records to support your Self Assessment.

Use the

to model your crypto disposal tax liability before selling.