UK crypto tax works on three rules and most people know none of them

Most guides to UK crypto tax start with what tax is. This one starts with what actually decides your bill, because for almost every UK crypto investor the answer is three matching rules applied in a strict order, and once you can follow them, everything else is bookkeeping. Every rule below is the one the TaxHash engine applies, every citation links to the statute or to HMRC’s manual so you can read the source yourself, and every worked example uses the arithmetic HMRC’s own guidance describes.

On this page. What counts as a disposal, the three matching rules, rates and allowances, income, losses, filing, older years, DeFi and NFTs, common mistakes, and quick answers.

The short version first. HMRC treats cryptoassets as property, not currency. Selling, swapping, spending or gifting them is usually a disposal for Capital Gains Tax. Earning them, through staking rewards, mining or getting paid in crypto, is usually income. The gain on any disposal is proceeds minus allowable cost, and the entire difficulty of crypto tax is working out which cost, because you bought at many prices and HMRC has precise rules about which purchase matches which sale.

What counts as a disposal

A disposal happens when you sell crypto for pounds, and also in three situations that surprise people.

Swapping one token for another is a disposal of the first token at its market value. Trading BTC for ETH is, for tax purposes, selling your BTC at that moment’s price and buying ETH with the proceeds. An active trader who never touched pounds all year can still have hundreds of disposals.

Spending crypto is a disposal. Buying anything with crypto disposes of the tokens at their value when spent.

Gifting crypto to anyone except your spouse or civil partner is a disposal at market value. Transfers between your own wallets are not disposals, nothing changed hands, though you must be able to show both sides of the transfer, which is why per-wallet balancing matters.

Moving crypto onto an exchange, holding through a crash, and transferring between your own accounts are not disposals. Losses are only real once you dispose.

The three matching rules, in order

When you dispose of tokens, HMRC decides which acquisition they came from using three rules applied in strict sequence. The order comes from the Taxation of Chargeable Gains Act 1992 and is applied to crypto by HMRC’s Cryptoassets Manual at CRYPTO22200.

Rule one, same day

Tokens you acquired on the same day as the disposal match first, under section 105 TCGA 1992. Buy 1 ETH in the morning and sell 1 ETH that afternoon, and those two transactions match each other regardless of the ETH you already held. Day traders live almost entirely inside this rule.

Rule two, the next thirty days

Tokens you acquire in the 30 days after a disposal match next, under section 106A TCGA 1992, earliest disposal first. This is the bed and breakfast rule, and it exists to stop a specific manoeuvre, selling to realise a loss and immediately buying back.

A compact example shows the mechanism. Your ETH pool stands at £2,000 average cost. You sell 2 ETH at £1,400, expecting a £1,200 loss against the pool, then buy 2 ETH back six days later at £1,450. The sale matches the rebuy, proceeds £2,800 against matched cost £2,900, a £100 loss, and your pool sits untouched at £2,000 average. The £1,200 loss never happened. Swaps trigger this too, because every crypto-to-crypto trade is an acquisition of the incoming token, so active traders wander in and out of section 106A constantly without noticing. Our bed and breakfast explainer walks a January version of this story in full.

Rule three, the section 104 pool

Everything left matches against your pool, under section 104 TCGA 1992. Each cryptoasset you own forms one pool with one average cost. Every purchase adds to the pool, every disposal draws out at the pooled average. Our section 104 pool explainer walks the arithmetic, and one worked example here shows the shape.

You bought 1 BTC at £20,000 in 2022 and 1 BTC at £40,000 in 2024. Your pool holds 2 BTC at a cost of £60,000, an average of £30,000 each. In March 2026 you sell 0.5 BTC for £25,000.

The pool carries forward as 1.5 BTC costing £45,000. Notice what the average did. You cannot choose to sell “the expensive coin”. The pool has already blended them.

One more thing the manual is explicit about, NFTs are separately identifiable, so they are not pooled. Each NFT keeps its own cost.

Rates and allowances, the current numbers

For the current tax year, the Capital Gains Tax annual exempt amount is £3,000 for individuals. Your first £3,000 of net gains each tax year is tax free. This allowance was £12,300 as recently as the 2022 to 2023 tax year, which is worth knowing if you are filing older years, and it is a use-it-or-lose-it allowance, it does not carry forward.

Above the allowance, gains are taxed at 18% and 24%, 18% where they fall within your unused basic rate Income Tax band and 24% above it. Higher and additional rate taxpayers pay 24% on the lot. Both figures are HMRC’s published current rates, checked the day this guide went live, and past years used different rates and allowances, which is why software that computes older tax years has to carry the correct historic figures per year rather than applying today’s. TaxHash does exactly that, and the capital gains report states the allowance and rates it applied for each year. For a quick estimate on a gain you already know, the CGT calculator applies the correct year’s figures with the working shown.

Income, the other tax

Some crypto arrives rather than being bought, and HMRC usually treats it as income at your marginal Income Tax rate, based on the sterling value when you received it.

Staking rewards, mining income, airdrops received in return for something (a service, a promotion), interest-like yields from lending, and being paid in crypto all generally land here. Two important consequences follow. First, that sterling value becomes the acquisition cost of the tokens for later Capital Gains Tax. Second, income needs reporting even in a year with no disposals at all.

One worked example makes the two-tax interaction concrete. You receive 100 tokens of staking rewards when the token trades at £3. That £300 is income now, reportable at your marginal rate. Two years later you sell the 100 tokens for £750. The disposal computes against an acquisition cost of £300, the value already taxed as income, so the capital gain is £450, and nothing was taxed twice. Skip the income step, and your acquisition cost is wrong for every later disposal, which is one of the commonest errors in self-prepared crypto returns.

The boundary cases, whether frequent trading amounts to a financial trade, how to treat DeFi arrangements where tokens leave your control, are genuinely complicated, and this guide, like the app, assumes you are investing rather than trading. If your situation lives on those boundaries, a vetted professional is money well spent.

Losses are worth money, claim them

Net losses in a year offset your gains before the allowance is applied, and unused losses carry forward indefinitely, but only if claimed. A loss must normally be claimed within four years of the end of the tax year it arose in, which means a bad 2022 is still claimable now, and worth real money against future gains, but not forever.

Two special cases matter for crypto. Tokens that became worthless can support a negligible value claim under section 24 TCGA 1992, treating them as disposed at nil. And tokens lost with keys are harder, losing access is not by itself a disposal. The app’s report suite includes a gifts, losses and claims report and a negligible value claim letter, because a loss that never reaches paper never happened.

Filing, where the numbers actually go

UK individuals report capital gains through Self Assessment on the SA108 form, the capital gains summary pages filed alongside the main return. You must report if your gains exceed the allowance, or if you want to claim losses, and the proceeds rules catch some people with modest gains but high turnover, swaps count toward proceeds, remember.

The online filing deadline is 31 January following the end of the tax year, so the tax year that ended 5 April 2026 files by 31 January 2027. The app’s SA108 helper maps your computed figures to the form’s boxes, verified against the current form itself, and our filing walkthrough covers the January mechanics.

Records are your responsibility, and HMRC can ask for them years later. Dates, amounts, values in sterling, wallet addresses, what was disposed and what it matched against. This is precisely the working the app shows on every disposal and bundles into the accountant pack, keep it.

Filing older years, the numbers that changed

Because losses reach back four years and HMRC enquiries reach further, older years get filed and amended all the time, and the allowance and rates were different then. These figures are from HMRC’s published rates and allowances, checked the day this guide went live.

Look at 2024 to 2025 again, the rates changed mid-year on Budget day, so a single tax year contains two rate regimes and the date of each disposal decides which applies. Software that applies one blended rate to that year is wrong on its face. The allowance collapse matters just as much, an investor whose gains sat comfortably inside £12,300 in 2022 can owe tax on the same-sized gains today, which is precisely why people who never previously filed are filing now.

DeFi, NFTs and the awkward corners

Honest guides admit where the map fades. Lending and staking through DeFi protocols can amount to a disposal on entry if beneficial ownership of your tokens passes to the protocol, and HMRC’s guidance walks through indicators rather than bright lines, which is why the app treats straightforward staking rewards as income and flags exotic arrangements for review rather than guessing. NFTs, as above, sit outside pooling entirely, each with its own cost, and their gas fees form part of allowable cost. Liquidity pool tokens, wrapping, and bridging each raise the same underlying question, did ownership of the original asset change, and the answer decides whether a taxable disposal happened. When your history contains these, run the numbers, then have a vetted professional sanity-check the characterisation, it is a far smaller job than a full reconciliation because the working is already laid out.

The five mistakes that actually cost people

Years of broken histories rhyme. First, missing acquisitions, an exchange that closed, a wallet forgotten, so disposals match nothing and balances go negative, the app hunts these during reconciliation. Second, treating swaps as nothing because no pounds moved. Third, the 30-day rule surprising a January loss-harvest, as above. Fourth, staking income never recorded, poisoning acquisition costs downstream. Fifth, records kept nowhere, so an enquiry letter years later lands on an empty drawer. Every one of these is cheap to fix now and expensive to fix under deadline.

Why this is hard by hand, and what to do instead

Follow the arithmetic above for one asset and five transactions, and it is a pleasant puzzle. Follow it for eight assets across three exchanges and two wallets, with transfers between them, fees on every hop, swaps that are disposals of one asset and acquisitions of another, staking rewards arriving weekly, and the 30-day rule reaching across month boundaries, and it stops being a puzzle and becomes a reconciliation project. One missing transaction shifts a pool average and changes every gain computed after it. That is not a reason to pay someone £79 every April, it is a reason to use software that does the matching and then proves it.

That last part is the difference worth shopping on. Any competent engine can apply these rules. The question is whether you can check it. TaxHash computes entirely on your machine, nothing you import ever leaves it, and every disposal on screen names the rule that matched it, same day, thirty day, or pool, with the law behind it, so any line of your return can be traced back to the sections linked above. Under 1,000 transactions the whole thing, reports included, is free.

Quick answers to the questions everyone asks

Do I pay tax when I buy crypto with pounds? No. Buying is an acquisition, it sets cost, it triggers nothing. Tax arrives on disposal.

Is swapping one crypto for another really taxable? Yes, a swap is a disposal of the outgoing token at market value. This is the single most consequential fact in UK crypto tax and the least known.

What if my gains are under £3,000? Below the annual exempt amount and with modest proceeds, you may owe nothing and have nothing to report for gains, though income from staking or mining is its own question, and claiming losses still requires filing.

Do I pay tax on crypto I am still holding? No. Unrealised gains are not taxed in the UK, however large. Disposal is the trigger.

Can HMRC actually see my crypto? Assume yes. UK exchanges share data with HMRC, the international reporting framework for crypto is tightening year on year, and chains are public by design. Filing correctly is cheaper than the alternative in every scenario worth planning for.

What about crypto in an ISA or pension? You cannot hold raw crypto in an ISA, so ordinary holdings get no wrapper protection, the rules above apply in full.

I have never filed and I have years of history, how bad is this? Usually less bad than feared, older years had allowances up to £12,300, losses offset gains, and coming forward beats being found. Compute the actual numbers first, panic is not a data point, and the app does all years at once for free below 1,000 transactions.

Does TaxHash file the return for me? No. It computes, proves and documents everything, then its SA108 helper maps each figure to the form’s boxes. You, or your accountant, press submit at HMRC.

This guide is general information about UK tax rules, not personal tax advice, and your circumstances may change the answer. For advice on your own affairs, the directory of vetted professionals exists for exactly that.