Crypto Taxes in the UK – How to Report and Pay HMRC in 2025

As cryptocurrency continues to gain traction across the globe, the UK government has tightened its grip on the taxation of crypto assets. With more investors and traders entering the market, understanding UK crypto tax rules has never been more critical. If you’re involved in buying, selling, trading, or earning crypto, it’s essential to comply with HMRC crypto rules to avoid penalties and stay on the right side of the law. Here’s a comprehensive guide on how to report and pay crypto taxes in the UK in 2025.

What is Considered Crypto by HMRC?

Her Majesty’s Revenue and Customs (HMRC) considers crypto assets as property, not currency. This includes well-known cryptocurrencies like Bitcoin, Ethereum, and Ripple, as well as NFTs and stablecoins. If you buy, sell, trade, or receive crypto as income, you’re subject to specific UK crypto tax rules depending on how you interact with those assets.

When Do You Owe Taxes on Crypto in the UK?

You may be liable to pay Capital Gains Tax (CGT) or Income Tax, depending on your activity:

1. Capital Gains Tax Crypto UK

You owe CGT when you dispose of your crypto assets. This includes:

Selling for fiat (GBP, USD, etc.)
Swapping one cryptocurrency for another
Using crypto to purchase goods or services
Gifting crypto (except to a spouse or civil partner)

2. Income Tax on Crypto

Income Tax applies when you:

Receive crypto as payment for services or work
Earn crypto through mining or staking
Get crypto via airdrops (in some cases)

The amount you pay depends on your income tax band and whether the crypto was earned as income or gained as an investment.

Capital Gains Tax Rates in 2025

For the tax year 2025/26, the Capital Gains Tax allowance has been significantly reduced:

Tax-free allowance: £3,000 (down from previous years)
Basic rate taxpayers: 10% on gains above the allowance
Higher and additional rate taxpayers: 20%

If the gains push you into a higher tax band, the higher rate applies.

Example:

Suppose you bought Ethereum for £5,000 and sold it later for £10,000. Your gain is £5,000. After the £3,000 allowance, you’re taxed on £2,000.

How to Calculate Your Crypto Gains

To accurately calculate your gains, you’ll need:

Date of acquisition and disposal
Purchase and sale price (in GBP)
Associated costs (transaction fees, etc.)

HMRC uses the “share pooling” method, which means you average the cost of each crypto asset to determine gains. However, same-day and 30-day rules may apply for frequent trading, similar to share trading rules.

How to Report Crypto Gains and Income to HMRC

You must report any taxable gains or crypto income through your Self Assessment Tax Return. Here’s how:

Register for Self Assessment (if not already done)
Maintain detailed records of every crypto transaction
Report crypto capital gains under the Capital Gains section
Report crypto income under Other Income or Self-employment, depending on the source

The deadline for filing online is 31 January 2026 for the 2024/25 tax year.

Records You Must Keep for HMRC

Keeping accurate records is not optional—HMRC requires complete transparency. Store the following details:

Type of crypto asset
Date and value (in GBP) when you acquired and disposed of it
Amount of crypto
Transaction ID
Wallet addresses
Exchange records and fees

Several crypto tax software tools can automate this process and help generate HMRC-compliant reports.

What Happens If You Don’t Report?

Failure to report crypto taxes can result in:

Interest on unpaid taxes
Penalties up to 100% of the unpaid tax
Criminal prosecution in severe cases

HMRC has partnered with major crypto exchanges and now uses data-matching tools to identify undeclared assets.

HMRC and Crypto Exchanges

Since 2021, UK-based exchanges are required to share customer data with HMRC. This includes:

Trading history
Withdrawal records
Identity verification data

This collaboration makes it harder to hide crypto gains. Even if you’re using overseas platforms or DeFi wallets, you’re still responsible for reporting all taxable events if you’re a UK tax resident.

What If You’ve Made a Loss?

If you’ve lost money in crypto, you can claim capital losses. These can be used to reduce your gains either in the same tax year or carried forward to offset future gains. But you must report the loss to HMRC—just like you would with gains.

Crypto Gifts and Inheritance Tax

Gifting crypto to a spouse is tax-free.
Gifting to others may trigger a capital gains event.
Crypto holdings are also subject to Inheritance Tax (IHT) and should be included in estate planning.

Using Crypto Tax Software

Given the complexity of crypto transactions, using tax software is highly recommended. Popular platforms like Koinly, CoinTracker, and Accointing integrate with major exchanges, wallets, and DeFi platforms. They calculate:

Capital gains and losses
Income from staking or airdrops
Generate reports for HMRC crypto rules

These platforms also help apply the appropriate accounting rules like share pooling and same-day matching.

Final Tips to Stay HMRC Compliant

Track everything from the start—don’t wait until tax season.
Don’t ignore airdrops, forks, or staking rewards—they may be taxable.
File your Self Assessment on time and declare all crypto-related gains or income.
Seek help from a tax advisor familiar with UK crypto tax if you’re unsure.

Conclusion

As we move through 2025, crypto taxation in the UK is only becoming more regulated. Whether you’re a casual investor or an active trader, staying informed about HMRC crypto rules is vital. Failing to report your gains could lead to hefty fines or legal issues, but with careful planning, the right tools, and proper record-keeping, you can ensure you stay compliant while maximizing your profits. Stay proactive, organized, and tax-smart.