Cryptoassets Tax in United Kingdom
Cryptoassets are not treated as money in the UK. Therefore, tax can apply in ways that surprise people. Most importantly, HMRC expects you to assess and report the right figures. GOV.UK
This guide explains tax on cryptoassets UK in plain language. It follows HMRC’s approach and common Self Assessment practice. Moreover, it helps you avoid mistakes that trigger penalties. If you want peace of mind, Sepera Accounting can handle the crypto reporting. As a result, you can focus on running your business.
Quick answers before we start
- You do not pay tax just for holding cryptoassets.
- You may pay Capital Gains Tax on crypto when you dispose of tokens.
- You may pay Income Tax on some crypto income such as staking or mining rewards.
- You usually report crypto in cryptoassets Self Assessment via the Capital Gains section.
- You must keep good records, because HMRC can ask for evidence.
Step 1: Know what HMRC means by “cryptoassets”
HMRC uses “cryptoassets” as a broad term. It covers more than popular coins. It can include:
- exchange tokens used for investment or payments
- utility tokens that unlock access to services
- security tokens linked to rights in a business
- stablecoins
- NFTs, depending on structure and use
These labels matter, because tax treatment can differ. However, most individuals meet tax issues through disposals and rewards.
Step 2: Understand what counts as a “disposal”
A disposal is the key trigger for Capital Gains Tax on crypto. In other words, it is when you give up ownership. HMRC treats several actions as disposals, including:
- selling tokens for money
- swapping one token for another
- using tokens to pay for goods or services
- giving tokens away (with some exceptions)
Step 3: Work out if you made a gain or a loss
Allowable costs usually include:
- what you paid to acquire the tokens
- transaction fees
- certain professional costs linked to the transaction
You cannot usually deduct costs that are not directly linked. So, keep your calculations clean and evidence based.
Step 4: Use HMRC’s pooling approach for token costs
For many individuals, HMRC expects a “pooling” method for matching costs. That is to say, you track an average cost for each type of token.
The matching rules can include:
- same-day acquisitions and disposals
- “bed and breakfasting” style matching within a short window
- then the pooled holding for that token
This is where spreadsheets help. It is also where mistakes are common. Therefore, many clients ask Sepera Accounting to set up a simple record system early. As a result, returns become faster later.
Step 5: Know when Income Tax applies
Not every crypto event is Capital Gains Tax. Some receipts are income. HMRC often treats certain rewards as taxable income, depending on the facts.
Staking rewards
If you receive staking rewards and you are not trading, HMRC can treat the tokens as taxable income. You usually report it as “other income”.
Mining rewards
Mining can be income too. The treatment can depend on whether it looks like a trade. In many cases it is income, with allowable expenses rules applying.
Airdrops
Airdrops can be tricky. Some airdrops can be income, especially if received in return for a service. Others may be treated differently. Therefore, you must document why you received them.
Crypto paid through employment
If you receive crypto through work, PAYE may apply. However, you should still check what happened. If PAYE did not handle it correctly, you may need to report it.
Step 6: Decide if you are “trading” in crypto
Most individuals are not trading. They are investing. However, frequent activity can raise questions. HMRC looks at facts and patterns, not labels. So, volume, organisation and intent can matter.
If you are genuinely trading, the tax treatment can shift. For example, profits may fall under Income Tax rules instead of Capital Gains rules. Therefore, if you have heavy activity, get advice early.
This is a good moment to involve Sepera Accounting. A short review can confirm the likely treatment. Consequently, you avoid filing the wrong type of income.
Step 7: Report crypto correctly in Self Assessment
The biggest practical tips are simple:
- keep gains and income separate
- do not mix personal transfers with disposals
- reconcile totals to exchange statements
- keep notes for unusual events
Step 8: Keep records like HMRC expects
Good records reduce stress. They also reduce the risk of underreporting.
Therefore, you should store:
- exchange statements and confirmations
- wallet addresses you control
- transaction IDs (TXIDs) for blockchain evidence
- fee breakdowns
- GBP values at the transaction time
- notes explaining “why” you received tokens
Step 9: Watch deadlines and future reporting changes
Self Assessment has strict filing and payment deadlines. You should plan ahead, especially if you need exchange reports. Moreover, if you owe tax, late payment can trigger interest and penalties.
Also, reporting is changing. The UK has been moving towards stronger data collection from crypto service providers. Draft rules have been published to require reporting of user data in line with the OECD Cryptoasset Reporting Framework. Therefore, “HMRC will not notice” is a risky assumption.
Common mistakes to avoid
Here are the errors that cause the most trouble:
- forgetting that swaps are disposals
- using the wrong cost basis instead of pooling rules
- ignoring fees, or double counting fees
- missing staking income
- mixing personal transfers with taxable disposals
- losing evidence for valuations and dates
A simple checklist you can copy
Use this short checklist before filing:
- Export all exchange transactions for the tax year.
- List every wallet and address you used.
- Tag disposals: sell, swap, spend, gift.
- Calculate gains using pooling rules.
- Separate income from staking or mining.
- Save evidence of GBP values and fees.
- Prepare notes for airdrops and unusual receipts.
How Sepera Accounting helps with Crypto Tax?
Crypto reporting is detail heavy. Therefore, most problems come from messy data, not tax rates.
Sepera Accounting can help you:
- organise wallet and exchange records
- calculate gains under HMRC style rules
- classify staking, mining and airdrops correctly
- prepare and submit your Self Assessment return
- reduce risk of errors and penalties
In other words, you keep building your business. Meanwhile, the accounting side stays compliant.
