Crypto taxes in the UK: how to stay compliant
HMRC is going after crypto investors who don’t declare their gains. Here is a guide to what taxes crypto investors in the UK need to pay to avoid penalties.
Scott Brown ● Feb 17, 2025
Related Posts
The UK government has been ramping up efforts to ensure crypto investors comply with tax laws. With around seven million Brits owning crypto assets, many investors remain unaware of their tax obligations or that HMRC can track their transactions. Make sure you understand the rules before you get an unexpected tax bill.
Last year HMRC sent out thousands of “nudge” letters to those suspected of not declaring gains from their crypto assets. The letters warned that additional taxes, interest or penalties may apply if profits are undisclosed.
If you get a letter, don’t ignore it. Rather double-check that you have filled in your tax return correctly because if you haven’t and HMRC contacts you before you contact them, the penalties are much higher.
In April last year, HMRC also updated the Self-Assessment tax return to require separate reporting of crypto transactions.
HMRC’s digital disclosure service allows you to bring your tax affairs up to date if you have made a mistake.
What are crypto assets?
HMRC does not consider crypto assets to be currency or money.
In its Cryptoassets Manual, HMRC lists the main types of crypto assets or tokens as:
- Exchange tokens, with Bitcoin being the most common.
- Utility tokens, which give their holder special access to a product or service in the future.
- Security tokens, which represent ownership in an asset, and
- Stablecoins, a type of cryptocurrency whose value is pegged to another asset, such as a fiat currency or gold.
Tax rules for crypto assets in the UK
So, how do you make sure you are compliant? Unlike some countries, the UK does not have a specific tax regime for cryptocurrency. Instead, standard tax rules apply, meaning your crypto transactions could be subject to Capital Gains Tax (CGT) or income tax, depending on how you acquire, use or dispose of your assets.
CGT on crypto assets
If you buy and sell crypto as an investment, any profits you make are subject to CGT. This applies when you:
- Sell crypto for more than you paid for it
- Exchange one cryptocurrency for another
- Use crypto to purchase goods or services
- Gift crypto (unless to your spouse or civil partner)
The following Capital Gains Tax rates apply: 18% and 24% for individuals (not including carried interest gains).
Income tax on crypto earnings
If you receive crypto as part of work or other activities, income tax (and possibly National Insurance) applies. This includes:
- Employment income – If your employer pays you in crypto, it is taxed like a salary.
- Mining and staking rewards – Regular crypto mining or staking earnings are treated as taxable income.
- Airdrops and rewards – If received as part of a business or work-related activity, they are taxable as income.
If your crypto-related activities amount to running a business, trading income tax may apply, though HMRC maintains that this is rare for individuals. Otherwise, earnings not classified as trading or employment income may fall under miscellaneous income and still be taxable.
Records to keep for crypto taxes
HMRC requires investors to keep accurate records of their crypto transactions, including:
- Dates of transactions
- Purchase and sale values (in GBP)
- Fees paid
- The nature of each transaction (buying, selling, exchanging or earning crypto)
While you don’t need to report crypto holdings to HMRC unless you earn or dispose of them, failing to declare taxable crypto transactions can lead to penalties.
It can be complex so whether you are an individual or run a small business and need help with your crypto investments, it is best to consult with an expert.
HMRC can track cryptocurrency transactions
Many investors are under the impression that their crypto transactions are private but HMRC has a data sharing programme in place with some of the major exchanges so it can access your data.
This means that HMRC can compare what you have reported on your tax return with the information they receive.
The UK government has also committed to implementing the Organisation for Economic Co-operation and Development's Crypto-Asset Reporting Framework (CARF) on 1 January 2026.
This will require crypto service providers to automatically share details on crypto investors and their transactions with local tax authorities. It will make it much easier for HMRC to obtain the details of anyone buying and selling crypto assets in the UK as well as on UK residents who are operating on overseas crypto exchanges.
As the UK’s crypto landscape continues to evolve, staying informed, keeping accurate records, and understanding your tax obligations are essential in ensuring compliance with HMRC’s crypto tax rules to avoid potential penalties.