Crypto Tax UK 2026 – HMRC Rules, CGT Rates & Self Assessment Guide

HMRC has clear guidance on cryptocurrency taxation in the UK. This guide explains Capital Gains Tax on crypto, income tax on staking and mining, the Section 104 pooling rule, and how to report on Self Assessment.

HMRC's View on Cryptocurrency

HMRC treats cryptocurrency as a capital asset, not currency. This means:

• Profits from selling crypto = Capital Gains Tax (CGT)
• Income from mining, staking, airdrops = Income Tax
• HMRC's detailed guidance is in the Cryptoassets Manual (CRYPTO)

Capital Gains Tax Rates for Crypto (2026)

Annual CGT Exemption: £3,000 per year (2024/25 and 2025/26). Gains below this threshold are tax-free.

What Triggers Capital Gains Tax in the UK?

• Selling crypto for GBP or other fiat
• Exchanging one crypto for another
• Spending crypto on goods or services
• Gifting crypto to anyone other than a spouse/civil partner
• Donating crypto to charity (but special relief may apply)

Not taxable: Buying crypto with GBP, transferring between your own wallets, gifting to spouse or civil partner.

The Section 104 Pool Rule

Unlike the US (FIFO), the UK uses a Section 104 pooling method:

• All units of the same crypto you hold are pooled together
• The pool has a total cost basis (all purchases averaged together)
• When you sell, you use the average cost per unit: Total Pool Cost ÷ Total Units
• Exception: Same-day rule and 30-day rule (bed and breakfasting rules)

30-Day Rule (Bed & Breakfasting): If you sell and repurchase the same crypto within 30 days, the cost basis of the new purchase is used first for calculating the gain (to prevent artificial loss harvesting).

Income Tax on Crypto

• Mining: If treated as a business → trading income; if hobby → miscellaneous income
• Staking rewards: Miscellaneous income at receipt FMV
• Airdrops with no strings attached: Usually not income; becomes CGT asset at £0 cost
• Airdrops requiring action: Income tax on receipt
• DeFi lending rewards: Income tax

Self Assessment: How to Report Crypto

1. Register for Self Assessment if you have crypto gains/income
2. Deadline: 31 January (online) following the tax year (April 5 year end)
3. Complete the Capital Gains Summary pages (SA108)
4. Report total proceeds, cost, and gains for each type of asset
5. If total gains + income exceed thresholds: consider payments on account

HMRC Compliance and Enforcement

• HMRC has obtained data from UK crypto exchanges and is issuing "nudge letters" to crypto investors
• HMRC participates in international data sharing – foreign exchange data is accessible
• Penalties for non-disclosure: 30% of unpaid tax (unprompted) to 100%+ (deliberate)

UK Crypto Tax Software

CoinTaxReporting supports UK tax reporting:

• Section 104 pooling calculation
• 30-day rule and same-day rule compliance
• Import from Coinbase UK, Binance, Kraken and all major exchanges
• SA108 compatible report

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.