Tax — Essential
Capital Gains
Tax on Crypto.
Sell crypto at a profit in the UK, and HMRC wants a share. The annual tax-free allowance is £3,000. After that, you pay 18% or 24% depending on your income. Here's how it actually works.
Key numbers — 2025/26
Annual exempt amount for capital gains
If total taxable income is below £50,270
If total taxable income exceeds £50,270
Bed and breakfasting anti-avoidance period
What triggers Capital Gains Tax
HMRC treats cryptocurrency as property, not currency. That means every time you dispose of crypto, you create a taxable event. A disposal isn't just selling for pounds. It includes three things:
Selling crypto for fiat. You sell Bitcoin for GBP on Coinbase. The difference between what you paid and what you received is your gain (or loss).
Swapping one crypto for another. You trade ETH for SOL. HMRC treats this as selling ETH at market value, then buying SOL. The ETH disposal creates a taxable event even though you never touched pounds.
Spending crypto on goods or services. You buy a laptop with Bitcoin. HMRC considers you to have disposed of that Bitcoin at its market value on the date of purchase.
Simply buying crypto with pounds is not a disposal. Transferring between your own wallets is not a disposal. Holding is not a disposal.
The £3,000 allowance
Every UK taxpayer gets a £3,000 annual exempt amount for capital gains. This covers all capital gains — not just crypto. Property disposals, share sales, and crypto gains all draw from the same allowance.
The short version: if your total capital gains for the tax year (6 April to 5 April) stay under £3,000, you owe nothing. If they exceed£3,000, you pay tax only on the amount above the threshold.
Worth knowing: this allowance was £12,300 as recently as 2022/23. It halved to £6,000 in 2023/24, then halved again to £3,000 in 2024/25 where it remains. That's a 76% reduction in three years.
Tax rates: 18% or 24%
The rate you pay depends on your total taxable income for the year. Add your salary, dividends, and other income together. Then add your capital gains on top.
If the total stays within the basic-rate band (up to £50,270 for 2025/26), you pay 18% on the gain. If it pushes you into higher-rate territory, the portion above the threshold is taxed at 24%.
In practice, most people with significant crypto gains end up paying 24% because the gain itself often pushes them past the basic-rate threshold.
How to calculate: the pooling method
HMRC uses “section 104 pooling” for crypto. You don't track individual coins. Instead, you maintain a pool for each type of crypto.
Here's how it works. Say you buy 1 BTC for £20,000 in January and another 1 BTC for £30,000 in March. Your pool is 2 BTC with a total cost basis of £50,000. The average cost per BTC is £25,000.
If you sell 0.5 BTC for £18,000, your allowable cost is 0.5 × £25,000 = £12,500. Your gain is £18,000 − £12,500 = £5,500.
Two special rules override pooling: the same-day rule (tokens bought and sold on the same day are matched first) and the 30-day rule (tokens reacquired within 30 days are matched before the pool).
Bed and breakfasting
“Bed and breakfasting” means selling an asset and buying it back to crystallise a gain or loss for tax purposes. HMRC has specific anti-avoidance rules for this.
The 30-day rule: if you sell crypto and repurchase the same token within 30 days, HMRC matches the sale against the repurchase — not your pool. This prevents you from selling to realise a loss, then immediately buying back at the same price.
In practice, if you want to crystallise a loss on Bitcoin, you need to wait at least 30 days before buying Bitcoin again. You could buy a different token in the meantime, but that introduces different risks.
The same-day rule takes priority over the 30-day rule, which takes priority over the pool. The matching order matters for your calculation.
Losses and offsets
Capital losses on crypto can be offset against gains in the same tax year. If your losses exceed your gains, you can carry the excess forward to future years — but you must report the loss to HMRC within four years.
This is actually one area where the rules work in your favour. If you hold a token that has dropped significantly, selling it to crystallise the loss (and waiting 30 days before repurchasing) can reduce your tax bill on other gains.
Reporting obligations
If your total disposal proceeds exceed £50,000 in a tax year, or your gains exceed the £3,000 allowance, you must report via Self Assessment. You report crypto gains on the Capital Gains Summary pages (SA108).
From 2026, your exchange is also reporting your activity to HMRC under CARF. Cross-referencing is coming. Accurate record-keeping is no longer optional — it's essential.
Disclaimer
This is not financial advice. Tax rules are subject to change and individual circumstances vary. Consult a qualified tax adviser before making decisions based on this information.
Last updated: March 2026