How to Report Crypto Taxes in the UK

In the UK, HMRC treats cryptocurrency as property subject to Capital Gains Tax (CGT) when you dispose of it, and Income Tax when you receive it as income (e.g., staking, mining, airdrops). The UK has specific rules like Section 104 pooling and the 30-day bed-and-breakfasting rule that differ significantly from other jurisdictions.

CGT applies when you sell, exchange, gift, or spend cryptocurrency. For the 2024-25 tax year, the CGT allowance is £3,000 (reduced from £6,000). Gains above this threshold are taxed at 10% for basic rate taxpayers or 20% for higher/additional rate taxpayers. The rates are lower than income tax, making it advantageous to hold crypto long-term.

The UK uses Section 104 pooling (share pooling) instead of FIFO or LIFO. All units of the same cryptocurrency are pooled together, and the average cost basis is used when calculating gains. When you acquire more of the same token, it's added to the pool and the average cost is recalculated. This differs fundamentally from the US FIFO method.

If you sell cryptocurrency and buy the same asset within 30 days, HMRC uses the repurchase price as the cost basis instead of the pooled average. This prevents tax loss harvesting by selling and immediately rebuying. You must wait 30 days to realize a loss for tax purposes. This is more restrictive than the US wash sale rule (which doesn't apply to crypto).

Report cryptocurrency capital gains on Form SA108 (Capital Gains Summary) as part of your Self Assessment tax return. You must include total disposal proceeds, allowable costs, and total gain. Taxxy automatically generates SA108-compliant reports with proper Section 104 pooling calculations.

Staking rewards, mining income, airdrops, and interest are treated as miscellaneous income and subject to Income Tax at your marginal rate (20%, 40%, or 45%). This income is reported on Form SA100 and counts toward your overall taxable income, potentially pushing you into a higher tax bracket.

You must report crypto gains and income on your Self Assessment tax return by January 31 following the tax year (April 6 to April 5). HMRC requires detailed records of all transactions, including dates, values in GBP, transaction fees, and wallet addresses. HMRC has sophisticated data-matching with UK exchanges and can request records up to 6 years back.

The annual CGT allowance for 2024-25 is £3,000 (down from £12,300 in 2022-23). This allowance allows you to realize up to £3,000 in gains tax-free each year. The allowance is separate from your Income Tax personal allowance (£12,570). Strategic timing of disposals can maximize use of this allowance.

HMRC may classify frequent crypto trading as trading income rather than capital gains, which would be subject to higher income tax rates (up to 45%) instead of CGT rates (10-20%). Factors include trading frequency, sophistication, and whether it resembles a business. Most retail investors are treated as investors, not traders.

Taxxy automatically generates HMRC-compliant SA108 forms with proper Section 104 pooling calculations, applies the 30-day bed-and-breakfasting rule, categorizes income vs. capital gains, provides GBP valuations using historical exchange rates, and produces audit-ready reports for Self Assessment filing. Simply connect your wallets and exchanges to get started.