Crypto Tax UK 2024/2025: A Crypto Investor’s Guide to HMRC Rules, CGT & Income Tax
- Omar Aswat
- Mar 11, 2025
- 6 min read
Updated: Dec 22, 2025
As cryptocurrency continues to gain popularity, understanding crypto tax in the UK for 2024/2025 is crucial for anyone involved in trading, investing, or earning digital assets. The UK government treats cryptocurrency as property rather than currency, meaning transactions are subject to Capital Gains Tax (CGT) or Income Tax.
In this guide, we break down the latest crypto tax rules in the UK, including how CGT and Income Tax apply, what records you need to keep, and how to stay compliant with HMRC.
Table of Contents
Is Cryptocurrency Taxable in the UK?
Yes, cryptocurrency is taxable in the UK. HMRC treats cryptocurrency as property or assets (not currency). Therefore, transactions involving digital currencies like Bitcoin, Ethereum, and others are subject to taxes, typically under Capital Gains Tax or Income Tax, depending on how you use or earn the cryptocurrency.
Taxation of Cryptocurrency: Capital Gains Tax (CGT)
When you dispose of cryptocurrency - whether through selling, trading, or using it to pay for goods or services - it may be subject to Capital Gains Tax (CGT). This applies when you make a gain on the sale or exchange of cryptocurrency. Note the below thoroughly as there are many misconceptions on when a gain crystalises.
When Do You Pay Capital Gains Tax (CGT) on Crypto in the UK?
Selling cryptocurrency for GBP or another fiat currency.
Trading one cryptocurrency for another (e.g., exchanging Bitcoin for Ethereum).
Using cryptocurrency to buy goods or services.
How to Calculate Crypto Capital Gains Tax (CGT) in the UK
To calculate CGT, you subtract the cost basis (what you originally paid for the cryptocurrency) from the proceeds (the value at which you sell or exchange it).
Example:
You bought 1 Bitcoin at say £90,000 and sold it for £95,000.
Your capital gain would be £5,000.
Annual CGT Exemption for Crypto Investors (2024/2025)
For the 2024/2025 tax year, the annual exemption is £3,000. This means the first £3,000 of your capital gains are tax-free. If your total gains for the year exceed this amount, you will pay CGT on the excess.
Example: If you made £5,000 in cryptocurrency gains, the first £3,000 is exempt, and you'd be taxed on the remaining £2,000.
How Much Crypto Capital Gains Tax (CGT) Will I Pay?
The tax rate for CGT depends on your income tax bracket:
18% if you’re within the Basic Rate income band (up to £50,270).
24% if you’re within the Higher Rate (up to £150,000) or Additional Rate income band (over £150,000).
Taxation of Cryptocurrency: Income Tax
If you earn cryptocurrency as income whether from mining, staking, or as payment for goods or services, Income Tax applies.
Examples of Cryptocurrency Income:
Mining: If you mine cryptocurrency, the rewards you earn are treated as income and subject to Income Tax.
Staking: Earning rewards through staking is considered income.
Payment for Goods/Services: If you accept cryptocurrency as payment for goods or services, the value of that cryptocurrency is treated as income.
Income Tax Bands for the 2024/2025 tax year:
Personal Allowance: £12,570 (income below this threshold is not taxed).
Basic rate: 20% on income from £12,571 to £50,270.
Higher rate: 40% on income from £50,271 to £125,140.
Additional rate: 45% on income above £125,140.
If you receive cryptocurrency as income, the value of the cryptocurrency at the time you receive it is considered the amount subject to Income Tax. This is added to your overall income for the year and taxed at the appropriate rate.
Example: If you receive £3,000 worth of cryptocurrency as payment, this amount is added to your total income and taxed based on your income tax band.
How Are Cryptocurrency Losses Taxed?
If the price of your cryptocurrency at disposal is lower than your original cost basis, you can claim a capital loss. Capital losses can offset your capital gains in the current year and reduce your tax bill!
Capital Losses Carry-Forward:
If you have a net loss for the year, your losses can be carried forward to offset capital gains in future tax years. Capital losses are unique in tax because they don’t expire and can be used to offset gains indefinitely, as long as they are registered correctly.
Important Consideration:
Capital losses can only be carried forward when they exceed all your gains for the same year. For example, if you make a gain of £10,000 in the tax year, and have a loss of £7,000, your losses will first be used to reduce your gain to £3,000 before you can offset future gains.
Time Limits for Reporting Losses:
You must report your capital losses to HMRC within four years of the end of the tax year in which the loss arose. After this period, you can no longer register your losses to offset future gains. It's crucial to claim these losses promptly, or you may lose the opportunity to carry them forward.
Record-Keeping for Cryptocurrency Transactions
HMRC requires that individuals and businesses keep detailed records of all cryptocurrency transactions, including:
The date of each transaction.
The amount of cryptocurrency bought or sold.
The price at which the cryptocurrency was bought or sold.
The type of cryptocurrency (e.g., Bitcoin, Ethereum).
The wallet address involved in the transaction.
Any fees associated with the transaction.
Maintaining accurate records is essential for calculating CGT and Income Tax. Failing to report cryptocurrency transactions correctly can result in fines or penalties.
Reporting Cryptocurrency Gains and Income
If you're subject to CGT or Income Tax on cryptocurrency, you must report this in your Self-Assessment tax return.
Self-Assessment: If you've made profits from cryptocurrency, you need to include them in your Self-Assessment return, which is due by January 31st of the following year.
If you trade cryptocurrency regularly, HMRC may classify you as a trader rather than an investor, which could change the tax treatment from CGT to Income Tax.
Crypto Airdrops, Hard Forks & Staking Rewards: UK Tax Rules Rewards
Airdrops: Cryptocurrency received through an airdrop is generally treated as income and taxable.
Hard Forks: If you receive cryptocurrency from a hard fork, the new coins are generally considered income and taxable when received.
Staking Rewards: Cryptocurrency earned through staking is treated as income and subject to Income Tax.
Crypto Tax Example: Sally’s Capital Gains and Income Tax Calculation
(Higher-Rate Taxpayer)
Let’s walk through an example where Sally, a higher-rate taxpayer, engages in multiple cryptocurrency transactions:
Sally buys 5 ETH for £10,000.
She stakes her ETH and earns 1 ETH as a reward, worth £2,000. Since Sally is a higher-rate taxpayer, the staking reward is subject to 40% Income Tax.
Income Tax on staking reward: 40% of £2,000 = £800.
Sally trades 3 ETH for 0.5 BTC. The value of 3 ETH at the time of the trade is £9,000. The cost basis for these 3 ETH was £6,000. The capital gain is £3,000 (£9,000 - £6,000).
CGT on ETH trade: 24% on £3,000 = £720.
Sally sells the 0.5 BTC for £12,000. The cost basis for the BTC is £9,000, resulting in a £3,000 capital gain.
CGT on BTC sale: 24% on £3,000 = £720.
Total Taxes Sally Paid:
Income Tax on staking reward: £800.
CGT on ETH trade: £720.
CGT on BTC sale: £720.
Net Gain For Sally
Total proceeds from sales (ETH and BTC): £9,000 (ETH trade) + £12,000 (BTC sale) = £21,000.
Total taxes paid: £2,240.
Net Gain: £21,000 (proceeds) - £10,000 (initial investment) - £2,240 (taxes) = £8,760.
Conclusion: Stay Compliant & Maximise Your Crypto Tax Efficiency
Cryptocurrency taxation in the UK for the 2024/2025 tax year includes Capital Gains Tax (CGT) on disposals and Income Tax on crypto earnings from mining, staking, or payments. With a £3,000 annual CGT exemption, understanding the applicable tax rates is essential.
To avoid unexpected tax liabilities, maintaining accurate records of all crypto transactions and correctly reporting gains and income in your Self-Assessment tax return is crucial. If you're unsure about your obligations, seeking specialist guidance can help simplify the process.
At ASWATAX, we combine deep expertise in both crypto and tax, offering practical insights beyond standard accounting advice. Whether you're investing, trading, or earning crypto, we help you stay compliant while optimising your tax position.
For most individuals, buying, holding, and selling crypto is considered investment activity, making them liable for CGT rather than Income Tax. Understanding these distinctions ensures you meet HMRC requirements while managing your tax efficiently.
Meet Omar
Omar is a Chartered Tax Advisor (a.k.a an expert on tax issues) and founder of ASWATAX. He regularly shares his knowledge and best advice here in his blog and on other channels such as LinkedIn.
Book a call today to learn more about what Omar and ASWATAX can do for you.
*Disclaimer: ASWATAX is a firm of Chartered Tax Advisors, and we strive to provide accurate, up-to-date tax insights. Tax laws may change, so this content is for general guidance only and not a substitute for professional advice. Seek independent tax and legal counsel before making decisions. ASWATAX is not liable for any loss from reliance on this information. Use at your own risk.
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