Before anything else: cryptoassets are not regulated financial products in the UK, they carry a considerable amount of risk to your capital, and they aren’t suitable for most investors. None of what follows changes that – but if you do hold cryptoassets, it’s worth understanding how HMRC expects you to treat them, because the rules are stricter, and more closely enforced, than many people realise.
HMRC treats crypto more like shares than currency
Depending on how you’ve acquired, held or disposed of cryptoassets, you could face up to three different taxes.
Income Tax
If you’re paid in crypto, that payment can attract Income Tax and National Insurance in the same way cash pay would. Mining can also count as taxable income, whether you’re doing it as a business or just as a hobby. And if you’re buying and selling frequently enough, and at large enough volumes, HMRC may decide you’re trading rather than investing – in which case your profits are taxed as income rather than under Capital Gains Tax rules.
Capital Gains Tax
For most everyday crypto investors, this is the tax that matters most. Everyone has an Annual Exempt Amount – £3,000 in 2026/27 – below which gains aren’t taxed at all. Above that, the rate depends on your income: gains that fall within your basic-rate band are taxed at 18%, while anything above that is taxed at 24%. Every disposal counts towards this, including swapping one cryptoasset for another, not just cashing out to pounds sterling – a step that catches a lot of people out.
Inheritance Tax
Cryptoassets count as property under UK law, so they form part of your estate for Inheritance Tax purposes just like any other asset. At the standard 40% rate, this can take a significant bite out of crypto holdings passed on to family, particularly once an estate is above the £325,000 nil-rate band (2026/27) – worth factoring into your wider estate plan rather than treating separately.
HMRC can now see far more than it used to
This is the part of the picture that’s changed most since this guide first went up. From 1 January 2026, UK crypto exchanges and platforms have been required to collect and report detailed information on their users directly to HMRC, under a new international standard called the Cryptoasset Reporting Framework (CARF). That includes your name, date of birth, address, National Insurance number or UTR, and details of your trades – transaction types, values, and the assets involved.
In practice, this means HMRC can now cross-check what you report on your tax return against what your exchange has already told them, and a growing number of countries are due to start sharing similar data internationally. Assuming crypto activity is invisible to HMRC is no longer a safe assumption, if it ever was – any gap between your tax return and what’s reported by your platform is now far more likely to be noticed.
Situations that often catch people out
Staking rewards and airdrops don’t fit neatly into a single category. HMRC generally treats staking rewards as miscellaneous income, taxable at their sterling value when you receive them – and then, separately, any later increase in value is subject to Capital Gains Tax when you eventually dispose of them. Airdrops can be taxed similarly, depending on the circumstances in which you received them. It’s easy to only think about the tax due when you sell, and overlook the income tax point at the moment you actually received the tokens.
Keeping records HMRC will accept
HMRC expects detailed records for every transaction: the type of token, the date of each disposal, the quantity involved, its value in sterling at the time, and your pooled cost basis (crypto of the same type is generally pooled together for cost purposes, rather than tracked coin by coin). HMRC can check your records going back four years as standard, extending to six years for carelessness and up to twenty years where it suspects deliberate non-disclosure.
For anyone with more than a handful of transactions, or holdings spread across several exchanges and wallets, keeping this manually becomes impractical fast. Software such as Koinly and similar crypto tax tracking tools can pull transaction history from exchanges and wallets and calculate your pooled cost basis and gains in a format that lines up with HMRC’s rules – useful for getting your figures right, though it’s not something we endorse or provide ourselves, and it doesn’t replace a proper conversation with your accountant or tax adviser about your overall position.
Talk to us before you act
If you hold cryptoassets and aren’t sure where you stand, it’s worth getting this looked at properly rather than guessing – particularly now HMRC has direct visibility into UK exchange activity. Please get in touch if you’d like to talk through your wider financial plan alongside any cryptoasset holdings you have.
Cryptoassets are not regulated financial products so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws and are not suitable for the majority of investors.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
The Financial Conduct Authority does not regulate tax planning, Inheritance Tax planning or estate planning.
This article is for general information only and does not constitute advice.
All information is correct at the time of writing and is subject to change in the future.