The complete UK crypto tax guide

HMRC does not treat cryptocurrency as currency. It treats it as property — similar to shares or land. That distinction matters because it determines how gains and income from crypto are taxed.

The main tax that applies to most crypto investors is Capital Gains Tax (CGT). This applies whenever you dispose of a crypto asset — which includes selling it, swapping it for another crypto, spending it on goods or services, or gifting it to someone other than your spouse.

Crypto can also create income, which is taxed as Income Tax. This includes staking rewards, mining income, certain airdrops, and interest from lending platforms.

The key HMRC publications you should know about are: CRYPTO10000 (the HMRC Cryptoassets Manual), and the more accessible Check if you need to pay tax when you sell cryptoassets and Check if you need to pay tax when you receive cryptoassets.

A disposal is any transaction where you give up ownership of a crypto asset. HMRC's definition is broad:

• —Selling crypto for fiat currency (GBP, USD, EUR, etc.)
• —Swapping one cryptocurrency for another (e.g. BTC for ETH)
• —Spending crypto on goods or services
• —Gifting crypto to someone other than your spouse or civil partner
• —Donating crypto to charity (though gift aid relief may apply)

Moving crypto between your own wallets — for example, from an exchange account to a hardware wallet — is not a disposal, as long as you can demonstrate that you own both addresses. Polyconomic tracks this automatically.

The distinction matters because Capital Gains Tax and Income Tax are calculated differently and have different rates and allowances.

Every individual in the UK gets an Annual Exempt Amount for capital gains. For the 2024/25 and 2025/26 tax years, this is £3,000.

This means your first £3,000 of capital gains each tax year are completely free of tax. If your total net gains (gains minus losses) for the year are below £3,000, you do not owe any CGT — and you may not need to report them at all (though reporting may still be required if total disposal proceeds exceed £50,000 in the year).

HMRC requires crypto disposals to be matched against acquisitions in a specific order. This is the most commonly misunderstood aspect of crypto tax, and getting it wrong leads to incorrect calculations.

The matching order, from first to last:

Staking rewards are generally treated as income by HMRC. The value of the tokens you receive at the point you receive them is the taxable income amount — in GBP at the market rate on that date.

When you later sell staked tokens, you pay Capital Gains Tax on any gain above the income value you already reported. Your cost basis for the disposal is the income value at the time of receipt.

Yield farming and liquidity provision are more complex. HMRC's published guidance does not cover all DeFi scenarios in detail, and the treatment can depend on the specific mechanism. Where guidance is unclear, we recommend taking professional advice.

You need to report your crypto gains to HMRC if:

• Your total capital gains in the tax year exceed the £3,000 annual exempt amount
• Your total proceeds from disposals exceed £50,000 in the year (even if you made no profit)
• You received crypto income (staking, mining, etc.) above your income tax allowances
• You are already required to complete a Self Assessment for other reasons

If you are below all these thresholds, you may not need to file. Polyconomic's free tier shows your position without any payment so you can check before deciding what to do.