Crypto Asset Taxation

How crypto is taxed

Crypto is treated as an asset for UK tax purposes and is therefore subject to UK taxation. There is two main taxes we need to consider for crypto Capital Gains Tax and Income Tax. For more information about Capital Gains Tax please visit the Taxation of Gains section. 

In most circumstances the purchase and sale of a crypto currency will result in a capital gain. This is usually preferable to income tax, as the rate of tax is lower. In extreme cases for example trading crypto currency is your full time job, HMRC may try to say you are carrying on a business trading cryptoassets and then you would be required to pay Income Tax and National Insurance.

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Furthermore HMRC treat the following as income rather than gains:​

• Mining activities

• Staking and Yield farming

• Airdrops

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Such activity is treated as miscellaneous income and you can earn up to £1,000 of miscellaneous income without having to pay any tax. In addition, if you are under the £1,000 threshold there is also no reporting requirements to HMRC.

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Crypto regulation changes in the UK​

Regulations are changing quickly and a new set of regulations are set to come into force from 1 January 2026. The new regulations are going to force UK residents to provide their name, date of birth, home address country of residence and National Insurance number to access cryptoasset services much in the same way you are required when opening a bank account. Providers of cryptoasset services also will have to keep details of all transactions you make including the value and the type of assets you trade available to the UK tax authorities or face penalties. 

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This means HMRC will soon know how much tax should be paid on these assets, and simply put, if the income or gains a taxpayer declares on their Self-Assessment Tax Return doesn’t match up with the amount reported by these platforms, HMRC has the information it needs to launch a tax investigation.

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If you have not previously advised HMRC about gains you have made now is the time to act before HMRC contact you.

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​Please note this text tries to cover the general rules for most taxpayers, however every individuals own tax affairs can be different and professional advice should be sort if you require information on which you can rely.

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