CGT on Cryptoassets UK 2026/27: Bitcoin, NFTs, DeFi and Staking -- Complete HMRC Guide

HMRC's Classification of Cryptoassets

HMRC first set out its position on cryptoassets in a policy paper in 2018 and expanded this into a detailed Cryptoassets Manual. The core principle has not changed: cryptoassets are intangible property, not currency. This distinction matters because it means:

• Gains are subject to CGT, not the foreign currency exemption that applies to personal foreign currency bank accounts.
• Each different type of token (Bitcoin, Ether, Solana, and so on) is a separate asset class.
• Within each asset class, all tokens held are aggregated into a single Section 104 pool.
• The normal CGT rules on disposals, matching, losses and the annual exempt amount all apply.

HMRC identifies four main types of cryptoasset: exchange tokens (such as Bitcoin and Ether, used as a means of payment or investment), utility tokens (which provide access to a product or service), security tokens (which carry rights akin to shares or debt instruments), and stablecoins. The tax treatment varies slightly -- security tokens may be subject to different rules if they constitute shares -- but for most retail investors holding exchange tokens, CGT is the primary concern.

What Counts as a Disposal

Any event that removes or reduces your beneficial ownership of a cryptoasset is a disposal. HMRC is explicit that the following all trigger a CGT calculation:

• Selling crypto for fiat currency (GBP, USD, EUR, and so on).
• Exchanging one crypto for another -- a Bitcoin-to-Ether swap is two events: a disposal of Bitcoin at GBP market value, and an acquisition of Ether at the same GBP value.
• Using crypto to buy goods or services -- the crypto is treated as sold at its GBP value on the day of the purchase.
• Gifting crypto to anyone other than a spouse or civil partner -- the gift is treated as a disposal at market value, even if no money changes hands.
• Donating crypto to a qualifying UK charity -- generally exempt from CGT (and eligible for Gift Aid in some cases).

The following are not disposals: transferring tokens between your own wallets (the beneficial owner remains the same), acquiring new tokens through an airdrop where nothing is given in exchange (though the tokens have a GBP cost of nil, creating a larger future gain), and in most cases simply staking existing tokens (the original stake is not disposed of).

The Section 104 Pool -- How Cost Basis Works

The Section 104 pool is the mandatory accounting method for cryptoassets. Rather than tracking each individual token purchase separately (specific identification), HMRC requires all holdings of a given token type to be pooled, with an average cost basis maintained across all acquisitions.

The pool records two running totals: the number of tokens and the total allowable cost(sum of all acquisition prices plus fees directly attributable to the acquisitions). When tokens are disposed of, the allowable cost of the disposal is:

Allowable cost of disposal = (tokens sold / total tokens in pool) x total pool cost

The gain (or loss) is then: disposal proceeds minus allowable cost of disposal.

Same-Day and 30-Day Matching Rules

Before applying the Section 104 pool, HMRC requires disposals to be matched against acquisitions in the following priority order -- designed to prevent investors from selling to realise a tax loss and then immediately rebuying at the same price (bed-and-breakfasting):

1. Same-day rule: match the disposal against any acquisitions on the same calendar day. The pool average is not used for same-day matched tokens.
2. 30-day rule: match remaining disposals against acquisitions in the 30 days after the disposal date, taking the earliest acquisition first.
3. Section 104 pool: any remaining unmatched disposal tokens use the pool average cost.

These rules apply separately to each token type and each day. The practical implication: if you sell Bitcoin at a loss on 1 June intending to claim that loss, you must not rebuy Bitcoin until at least 1 July. If you rebuy on 20 June, the disposal is matched to the rebuy at the rebuy price, and your intended loss is deferred or eliminated.

The 30-day rule can also work in your favour: if you sell at a gain and want to reset your cost basis, buying more tokens within 30 days will increase your cost basis for those newly matched tokens (at the rebuy price) rather than using the potentially much lower pool average.

CGT Rates and the Annual Exempt Amount 2026/27

Cryptoasset gains are taxed at the standard (non-residential property) CGT rates:

• 18% on gains that fall within the basic rate income tax band (income up to GBP 50,270).
• 24% on gains that fall within or push you into the higher rate band (above GBP 50,270).

Your income tax position for the year determines how much basic rate band remains available for gains. Gains use up the remaining basic rate band first before the 24% rate applies.

The Annual Exempt Amount (AEA) is GBP 3,000 for 2026/27. Net gains up to this threshold are entirely free of CGT. The AEA cannot be carried forward -- unused allowance is lost at the end of each tax year.

Staking Rewards -- Income Tax Before CGT

HMRC treats most staking rewards as miscellaneous income at the point they are received. The taxable amount is the GBP market value of the tokens on the date of receipt. This income is reported on a Self Assessment return and is subject to income tax at the individual's marginal rate (20%, 40% or 45%). If staking amounts to a trade, Class 4 NI may also apply.

The tokens received as staking rewards are then treated as acquired at the income value already assessed -- this becomes the cost basis for future CGT purposes. Only growth above that income value is subject to CGT on later disposal.

Example: You receive 2 ETH as staking rewards when ETH is worth GBP 2,500. Income: 2 x GBP 2,500 = GBP 5,000. Income tax at 40%: GBP 2,000. You hold for one year and sell both ETH at GBP 3,500 each (proceeds GBP 7,000). CGT gain: GBP 7,000 - GBP 5,000 (income cost basis) = GBP 2,000. CGT at 24%: GBP 480.

Yield farming and liquidity mining rewards are generally treated in the same way as staking rewards. The key question HMRC applies is whether the activity constitutes a trade or is more analogous to investment income -- for most retail stakers the answer is income from a non-trade source.

DeFi, Wrapped Tokens and Liquidity Pools

DeFi protocols present some of the most complex crypto tax scenarios. HMRC has published initial guidance but acknowledges that the area continues to develop. The following principles currently apply:

• Wrapping tokens: converting ETH to Wrapped ETH (WETH) or any similar wrapped version of a token is generally treated as a disposal of the original token and an acquisition of the wrapped token at current GBP market value. Unwrapping constitutes a further disposal.
• Liquidity pool deposits: depositing tokens into a liquidity pool in exchange for LP tokens is generally a disposal of the underlying tokens and an acquisition of LP tokens. Withdrawing from the pool is a disposal of LP tokens and reacquisition of the underlying tokens at current market value.
• Impermanent loss: impermanent loss does not create a separate CGT event -- it is reflected in the lower disposal proceeds when you withdraw from the pool.
• Lending protocols: depositing tokens into a lending protocol (e.g., Aave, Compound) in exchange for interest-bearing tokens is likely to be treated as a disposal. HMRC's guidance here is less settled than for liquidity pools.
• Blockchain bridges: moving tokens from one blockchain to another via a bridge typically constitutes a disposal of the original token and acquisition of the bridged representation.

Given the complexity, keeping a full audit trail of every DeFi transaction -- including the GBP value at the time of each event -- is essential. Specialist crypto tax software (such as Koinly, CoinTracker or TaxBit) can help automate this for users with high transaction volumes.

NFT Disposals

Non-fungible tokens are unique, so they cannot be pooled in a Section 104 pool. Each NFT is treated as a distinct, individually acquired asset with its own cost basis.

CGT applies when you sell, exchange, gift or use an NFT. The gain is market value at disposal minus the original acquisition cost (including any gas fees paid to mint or purchase the NFT). If you purchased an NFT with cryptocurrency, the purchase was itself a disposal of the crypto (at GBP market value at that time), and the NFT's cost basis is that same GBP value.

Artists and creators: if you mint and sell NFTs as a regular commercial activity, HMRC may treat the income as trading profit subject to income tax and NI rather than CGT. Royalties from secondary sales of NFTs are also likely to be treated as income. The line between investor and trader is a facts-and-circumstances test; if in doubt, obtain specialist advice before your first sale season.

Capital Losses -- Claiming and Carrying Forward

Crypto losses can be used to reduce taxable gains in the same tax year or carried forward to future tax years indefinitely. They cannot be carried back (except in the year of death) and cannot be offset against income (unless the loss arose from a qualifying enterprise investment -- which does not apply to typical crypto holdings).

To claim a loss, you must report it to HMRC. Losses are not automatically applied -- you must actively claim them on your Self Assessment return. Losses from tax year 2020/21 onwards generally must be claimed within four years after the end of the tax year in which they arose.

Negligible value claims: if you hold tokens on an exchange that has collapsed and your tokens are irrecoverable, you may be able to make a negligible value claim under S.24 TCGA 1992. If HMRC accepts the claim, a disposal is treated as occurring (at nil proceeds) on the date of the claim or an earlier agreed date, crystallising a capital loss. Evidence required includes records of the original acquisition, the exchange insolvency proceedings, and confirmation that recovery of funds is impossible.

DAC7 Reporting and HMRC Data Matching

From 1 January 2024, UK crypto asset trading venues and certain overseas platforms serving UK users are required to collect and report user identity and transaction data to HMRC under UK rules equivalent to the EU DAC7 directive. The first reports covering 2024 were submitted to HMRC in early 2025.

Data reported includes: full name and address, National Insurance number or UTR, total GBP proceeds received from disposals, and number of transactions per calendar year. HMRC uses this data to cross-reference against Self Assessment returns and to identify taxpayers who have not declared gains.

The practical implication is significant: the era of unreported crypto gains going undetected is increasingly over. HMRC has already written to thousands of crypto investors under its crypto taskforce, and investigations are expected to intensify as DAC7 data becomes routinely available.

If you have unreported gains from prior years, HMRC offers an online disclosure facility. Voluntary disclosure attracts lower penalties than discovery by HMRC. Interest on unpaid tax runs from the original due date regardless of when the disclosure is made.

Record Keeping -- What HMRC Requires

HMRC requires you to keep the following records for each cryptoasset transaction:

• Date of the transaction.
• Number of tokens acquired or disposed of.
• GBP market value of the tokens at the time of the transaction (for both the asset given and the asset received in a swap).
• Transaction fees (gas fees, exchange fees) paid.
• Cumulative pool totals (tokens and allowable cost) after each transaction.
• Wallet addresses and exchange accounts used.

Records must be kept for at least five years after the 31 January Self Assessment filing deadline for the relevant tax year (six years if submitted late). Given the complexity of matching rules and the Section 104 pool, maintaining a spreadsheet or using dedicated crypto tax software from the outset is strongly recommended. Reconstructing records retroactively from blockchain explorers is possible but time-consuming and error-prone.

Self Assessment -- Reporting Crypto Gains

You must register for Self Assessment and complete a tax return for any year in which your total crypto gains (before the AEA) exceed GBP 3,000, or your total disposal proceeds exceed GBP 50,000, or you have crypto income (staking rewards, mining income) to declare. The filing deadlines are 31 October for paper returns and 31 January for online returns, both for the prior tax year.

Gains are reported in the Capital Gains Tax summary pages (SA108). Crypto income from staking, mining or airdrops with value is reported on the 'Other income' pages (SA107). If you are a basic-rate taxpayer and your gains are small, you may alternatively use the HMRC real-time CGT reporting service (for UK residents who do not need to complete a full Self Assessment return) to pay within 60 days -- though this service was primarily designed for residential property CGT.

Late filing attracts an automatic GBP 100 penalty, rising with further delay. Late payment attracts interest at the HMRC rate (currently Bank of England base rate plus 2.5 percentage points).