UK Crypto Taxes Explained for 2024

Made some money on a crypto investment and wondering if you need to pay tax in the UK? Just like share investments, HMRC requires UK residents to pay taxes on crypto profits.

Read on to learn how crypto tax works in the UK. We explain what needs to be paid on capital gains and income, alongside some useful strategies that can help reduce your tax burden in 2024.

UK Crypto Tax Rates

The UK has a simplified tax regime for crypto capital gains. In a nutshell, UK residents pay 10% or 20% depending on their income band.

If you’re a basic rate payer, you’ll pay 10% on capital gains. This means your total income is under £50,270. If you’re earning more than £50,270, then you’re a higher or additional ratepayer. This means you’ll pay crypto capital gains tax of 20%.

As we explain in more detail shortly, all UK residents get a capital gains tax allowance. This is £6,000 in 2023/24. So, if your crypto profits were under £6,000 and you didn’t make any other capital gains for the year, you won’t pay any taxes. The capital gains allowance will be reduced to £3,000 in 2024/25.

UK Cryptocurrency Taxes Explained

We’ll now take a much closer look at how crypto tax in the UK works.

Crypto Capital Gains Tax

Capital gains are the amount of money you make from a crypto investment. For instance, suppose you invested £10,000 into Bitcoin in 2023. In 2024, you sell the Bitcoin investment for £15,000. In this instance, your capital gains are £5,000. This is the amount that HMRC is interested in.

Crucially, taxes are only required once you dispose of the crypto assets. This means that unsold crypto investments are not liable for tax. So, to avoid paying capital gains tax, you can simply keep the crypto assets in your portfolio. More on this later.

The good news is that UK residents can make capital gains of up to £6,000 in 2023/24 without paying any tax. For instance, suppose you made £4,000 in crypto capital gains. In the same year, you made £1,500 gains from a share investment. Your total capital gains are £5,500 – meaning you won’t owe any taxes.

However, the bad news is that the capital gains tax allowance will be reduced to £3,000 in 2024/25. This is a significant drop from the £12,300 allowance that was available in 2022/23. Nonetheless, if you have any crypto investments that haven’t been sold in 2023/24, it could be worth doing a disposal. After all, it makes sense to maximize your annual allowances before they are reduced.

Tax on Buying and Selling Cryptocurrencies

Known as ‘stamp duty’, UK residents pay taxes when buying shares that are listed on the London Stock Exchange. Fortunately, stamp duty taxes don’t extend to crypto assets. This means you won’t pay taxes when buying crypto in the UK.

As mentioned, HMRC is only interested in crypto assets that have been disposed of. So, when you sell a crypto investment, taxes could be due. However, only if you made a capital gain on the investment.

For instance, suppose you bought £5,000 worth of Bitcoin. You sold the Bitcoin investment for £4,000. The disposal didn’t result in a capital gain, so no taxes would be due. HMRC allows UK residents to offset crypto losses, but more on this later.

Tax on Crypto Staking, Lending, and Interest Profits

The focus so far has been on crypto capital gains. That said, UK residents might also need to pay taxes on crypto income streams. This includes profits made from staking, lending, and savings accounts.

Unlike capital gains, crypto income isn’t based on disposed assets. On the contrary, any interest payments received will be added to your income total for the tax year. What’s more, the amount is based on the value of the income when it’s received.

• For example, let’s say you deposit 5 ETH into a staking pool.
• After the first month, you receive staking rewards of 0.1 ETH.
• When the income is received, 1 ETH is valued at £2,000. This means you’d need to add £200 to your income (0.1 ETH x £2,000).
• In the second month, you receive another 0.1 ETH from the staking pool.
• However, 1 ETH is now valued at £3,000. This means you need to add £300 (0.1 ETH x £3,000) to your income for the year.

We found that the best crypto exchanges in the UK offer daily staking rewards. This means that you’d need to calculate the equivalent GBP value every day.

What’s more, crypto income is defined as miscellaneous income. UK residents can make up to £1,000 in miscellaneous income without paying taxes. Anything above the £1,000 threshold should be added to your total income for the year.

Crypto Mining Tax

Crypto mining is treated the same as staking, yield farming, and other income streams. This means that mining rewards should be added to your total income for the year. It will then be taxed accordingly.

Once again, HMRC is interested in the value of the mining rewards on the day they’re received. This means UK-based miners should keep adequate records. Failing to do so can result in fines.

Just remember that you’ll get £1,000 in miscellaneous income allowances, which includes mining.

• UK crypto miners should also factor in capital gains.
• For example, suppose you receive mining rewards of 1 BTC. On that day, Bitcoin is worth £30,000.
• You sell the 1 BTC mining reward when Bitcoin is worth £35,000.
• This means you’ve made capital gains of £5,000 (£35,000 – £30,000).

Tax on Crypto Gifts

Similar to shares and other investments, crypto assets can be given as a gift. If the crypto gift is given to a spouse or civil partner, no capital gains tax will be due on the transfer.

However, gifting crypto to anyone else will trigger a disposal for tax purposes. The burden is on the person gifting the crypto, not the receiver. For example, suppose you bought £4,000 worth of crypto. You gift the crypto to a friend when it’s worth £9,000. This means you’d need to factor in £5,000 worth of capital gains.

That said, you’d still have £6,000 worth of capital gains allowance, which includes gifts.

The person receiving the crypto will also need to consider capital gains when they eventually sell. The cost basis is the original value of the crypto when it was purchased. Sticking with the same example, that would be £4,000 for the receiver.

When Do You Pay Tax on Crypto in the UK?

UK residents must pay crypto tax on ‘realized’ gains. This means profitable crypto investments that have been sold. Whether or not taxes need to be paid depends on several variables. For a start, all of your capital gains and losses should be factored in.

For example, suppose you made £10,000 on a crypto trade. But in the same year, you made a £7,000 loss on a stock investment. This means your capital gains for the year are £3,000. In addition, you should also factor in your capital gains tax allowances.

That’s £6,000 in 2023/24. So, if your total capital gains are under £6,000, no taxes are due. In 2024/25, your capital gains allowances are reduced to £3,000.

You’ll also need to pay crypto tax on income, such as staking or savings accounts. This will be added to your total income for the year, including your salary. This is the case even if the crypto income rewards aren’t sold. That said, you’ll still get £1,000 in miscellaneous allowances. You’ll also get £12,570 in personal tax allowances.

When you do sell your crypto income rewards, capital gains could be due. This depends on the value of the crypto when it’s sold. For example, suppose you receive 1 ETH in staking rewards. On receipt, 1 ETH is worth £1,500. When you sell the 1 ETH, it’s worth £2,500. Therefore, you’ve made capital gains of £1,000. This needs to be added to your total capital gains amount for the year.

Are There Any Tax-Free Crypto Transactions in the UK?

Some crypto transactions in the UK do not attract tax. For example, you won’t pay tax when buying crypto. You also won’t pay tax when holding crypto in your wallet. This means you won’t pay tax until the crypto assets are disposed of.

And even then, there might be circumstances where tax isn’t due. For instance, if you sold the crypto assets at a loss. Or, if you made capital gains but the total is under your annual tax-free allowances.

Gifting crypto to a spouse or civil partner is also tax-free. This is also the case when donating crypto to a registered charity.  You can also transfer crypto between wallets without paying tax. However, the wallets must be owned by you.

How to Calculate Crypto Tax

Now that we’ve covered the different types of crypto tax, we’ll explain how you can calculate what you owe.

Capital Gains

Let’s start with calculating taxes on crypto capital gains.

Calculate Capital Gains and Losses for the Year

The first step is tallying up all of your crypto investments for the respective tax year. This should only include investments that have been disposed of. Any crypto investments that haven’t been sold shouldn’t be included in your calculations.

Let’s say you made three different trades.

• First, you bought £2,000 worth of Bitcoin. You cashed out at £6,000. That’s a capital gain of £4,000.
• Second, you bought £10,000 worth of Ethereum. You cashed out at £18,000. That’s a capital gain of £8,000.
• Third, you bought £9,000 worth of Solana. You cashed out at £8,000, so that’s a £1,000 capital loss.

Across your three crypto trades, you made capital gains of £11,000 (£4,000 + £8,000 – £1,000).

Factor in Capital Gains Allowances

At this stage, you’ve got £11,000 worth of capital gains for the year. However, UK residents get £6,000 in capital gains allowances in 2023/24. Therefore, this can be subtracted from your capital gains of £11,000. This leaves you with taxable gains of £5,000.

If you’re cashing out crypto in 2024/25, then you’ll only receive capital gains allowances of £3,000.

Calculate Taxes

The tax rate on crypto capital gains depends on your total income for the year.

• Basic ratepayers will pay capital gains of 10%. So, on a £5,000 capital gain, that’s £500.
• Higher and additional ratepayers will pay capital gains of 20%. That’s £1,000 on a £5,000 gain.

Just remember to include any other capital gains investments in your totals. Shares, funds, and most other assets are taxed the same as crypto. The only exception is residential property, which carries a capital gains tax rate of 18% (basic payers) or 28% (higher/additional payers).

Income

Now let’s explore how to calculate taxes on crypto income, such as staking, yield farming, mining, and savings accounts.

Calculate the Value of Crypto Income Received

The first step is to tally up all of the crypto income you received during the year.

For each transaction, this should include:

• Name of the crypto asset (e.g. Bitcoin)
• The amount received (e.g. 0.2 BTC)
• Market price when received (e.g. 1 BTC = £30,000)
• The value of the income when received (e.g. 0.2 BTC = £6,000)

You’ll need to do this for every incoming payment. This can be cumbersome, considering that some crypto income streams make daily distributions.

In this instance, it could be worth using a reputable crypto tax software. The provider will extract data from your wallet and exchange accounts, alongside the GBP value of all crypto income received.

Nonetheless, for this example, let’s suppose you received £11,000 worth of crypto income for the year.

Add Crypto Income to Salary Total

Next, you’ll need to add the crypto income to your annual salary.

For example, suppose your salary is £25,000. You made £11,000 in crypto income. So, your total income for the year is £36,000.

Any other income made during the year should also be added. For instance, part-time work.

Factor in Income Tax Allowances

At this stage, your total income for the year is £36,000. However, UK residents can also factor in their income tax allowances.

First, you can subtract £1,000 in miscellaneous income allowances. This is linked to the crypto income. This leaves you with a taxable income of £35,000.

Second, UK residents get personal income allowances of £12,570 in 2023/24. This can be subtracted from the total income of £35,000. This leaves you with a taxable income of £22,430. Anything income of between £12,570 and £50,270 in the UK carries a tax rate of 20%.

Therefore, in this example, you’d pay £4,486 in income tax. This includes both your salary and crypto income, after factoring in your miscellaneous and personal tax allowances.

How to Report Cryptocurrency Tax in the UK

Just like other investments, the UK has a self-reporting system for crypto taxes. This is known as a self-assessment tax return. Fortunately, HMRC is only interested in the totals. This means you won’t need to detail each crypto transaction you’ve made for the year.

Instead, you simply need to tally up your total capital gains and losses. For example, suppose you made a crypto gain of £9,000. In the same year, you made a £2,000 loss from an ETF investment. This means you’d need to report capital gains of £7,000. That said, you should still keep records of all crypto transactions, in case HMRC requests more information at a later date.

The self-assessment tax return should also include crypto income. Ordinarily, you wouldn’t need to do this if your only income comes from your salary. This is because your employer likely deducts income taxes automatically and reports this to HMRC. However, if you’ve made additional income that isn’t your full-time salary,  this needs to be added to the self-assessment form.

This should include staking, mining, yield farming, and any other crypto income streams. HMRC only needs the total income, which should be based on the market value when it was received.

Finally, just remember that you should only include capital gains or income made in the respective tax year. For example, if you sell crypto on April 6th, 2024 – this needs to be included in your 2024/25 self-assessment. But if the crypto was sold a day earlier, it would fall within the 2023/24 tax year.

1. Blockpit — Leading Crypto Tax Tracker and optimizer Supporting 300,000+ Assets

Blockpit is an advanced crypto tax software designed to simplify the tax reporting process for crypto (and other) transactions. Its features turn complex blockchain data into easy-to-understand tax reports quickly and efficiently.

It supports over 300,000 assets, including 160+ exchanges, 180+ blockchains, 70+ wallet providers, and over 2500 dApps. It also allows CSV file uploads for non-supported platforms, ensuring users can import data from almost any source.

One of Blockpit’s standout features is its support for multiple countries, providing detailed and accurate current and historical legal frameworks for over ten jurisdictions, including pre-filled annual tax forms. This software handles not just cryptocurrencies but also NFTs, derivatives, precious metals, and more, offering comprehensive coverage. Additionally, Blockpit provides 14 years of historical spot prices, including prices for over 95,000 NFT collections.

A recent addition to Blockpit’s features is tax optimization and tax harvesting. These enable users to simulate trades with predefined quick options such as “Realise maximum losses,” “Sell all tax-free holdings,” and “Sell entire portfolio.” This can be particularly useful for minimizing tax liabilities.

Users can preview their capital gains for any tax year for free, track their portfolio’s growth and ROI, see how much they gained or lost, and monitor income from mining, staking, and lending. However, for detailed tax reports, an annual subscription is required.

As with other crypto tax reporting tools, pricing starts from $49 per tax year (around £38). Use the button below and get $15 discount (around £11) when you sign up.

You can click the link below to claim an exclusive 15% discount on your first Blockpit purchase.

2. Koinly — Popular Crypto Tax Software That Supports Over 750 Exchanges and Wallets

Koinly is a popular crypto tax software because it can turn chaotic blockchain transactions into simplified tax reports within minutes. Import your trades via API or CSV files and connect your crypto wallets using the public addresses, and you’re all set.

This software uses AI to distinguish transfers between your wallets to keep track of your original cost. Moreover, it supports over 750 exchanges and wallets, meaning you can import data from all the leading platforms, such as Binance, Coinbase, Nexo, Kraken, MetaMask, Ledger, Revolut, Gemini, Bitcoin, Ethereum and more. Can’t find your exchange? Download your transactions in an excel format and Koinly will import it into your tax report.

Preview your capital gains for any tax year for free, track your portfolio, including growth and ROI, see how much you gained or lost or track your income from mining, staking and lending. For tax reporting, though, you’ll need an annual subscription.

Pricing starts from $49 per tax year (around £38), but this could be a small price to pay to get a handy tool for your tax reporting.

3. CoinLedger — Leading Crypto Tax Reporting Tool With NFT Support

CoinLedger is a leading crypto tax software, not only because you can track all your cryptocurrency transactions, but because you can also track NFT transactions. You get a report with short and long term gains and losses from your trading history for cryptocurrencies and NFTs.

On top of that, CoinLedger is now building a portfolio tracker where you can monitor all your digital assets across multiple wallets and exchanges. This means your staking, mining and other DeFi activity will be aggregated and shown to help you make more informed decisions. Sign up for the waitlist to be among to first to try the portfolio tracker.

All this makes CoinLedger one of the best crypto tax reporting tools you can get, especially if you also trade NFTs.

Pricing starts from $49 per tax season (around £38), but you can get 10% discount by using the code: CRYPTOTAX10 at checkout.

4. CoinPanda — Crypto Tax Reporting Tool With Portfolio Tracking Across 242 Blockchains

CoinPanda is a powerful crypto tax reporting software that tracks your entire crypto portfolio including NFT trading and DeFi activity like staking, mining, lending and borrowing. There are over 242 blockchains supported with over 50,000 cryptocurrencies, and over 600 exchanges and wallets, which can make a detailed tax report for your needs.

This includes exchanges like Coinbase, Binance, Kraken, eToro as well as MetaMask, Trust Wallet, Uniswap and OpenSea. All you have to do is import your trades either using an API or by uploading a CSV file, then preview your capital gains and download your tax report.

You can use CoinPanda’s portfolio tracker for free, and you can connect to as many exchanges and wallets as you want. But to get your tax report, you need to upgrade to a paid plan.

Similar to other crypto tax reporting tools, pricing starts from $49 per tax year (around £38). Use the button below and get $15 discount (around £11) when you sign up.

5. ZenLedger — Popular Tax Reporting Tool That Tracks Airdrops, Forks and DeFi Activity

ZenLedger offers a comprehensive crypto tax calculator where you can quickly see your cost basis and capital gains. This includes your entire crypto activity, including token airdrops, staking, lending and borrowing, mining, donations, margin trading and more.

This crypto tax reporting software supports over 400 exchanges, 100 DeFi protocols and over 10 NFT platforms, such as 1inch exchange, Binance, Cash App, Coinbase, eToro, Ledger wallets and more. Use an API or a CSV file to import your trading activity and you’ll get your tax report.

ZenLedger is building a portfolio tracker where you can view all your assets from one dashboard. You can join the waitlist to be among the first users of this extremely useful feature.

The pricing is similar to competitors where it starts from $49 per year (around £38), depending on your crypto activity and the number of transactions you made.

6. TokenTax — Tax Reporting Software For Your Entire Crypto Activity

TokenTax is a popular choice among crypto enthusiasts because it offers a simple tax reporting solution where you import your data from your wallet or exchanges and you review your estimated tax liability. If you find it hard to do it yourself, get the VIP package and a team of experts will prepare your tax returns.

Similar to other tax reporting tools, TokenTax supports API or CSV file upload of your transactions. Almost all centralized and decentralized exchanges are supported, including Binance, ByBit, Cash App, Coinbase, 1inch, Uniswap and Yearn Finance.

Unlike other tax reporting tools, however, there is no free preview with TokenTax. Basic membership starts from $65 per tax year (around £51) and can be a great option if you’ve had up to 100 transactions. If you were active in the DeFi space, consider getting the VIP package where the experts will fill out the tax return for you.

Does HMRC Track Crypto?

In late 2023, HMRC launched a campaign to recover unpaid cryptocurrency taxes. This should serve as a reminder that HMRC is stepping up its efforts on crypto-specific tax evasion.

However, HMRC has not released any guidance on whether it currently tracks crypto in the UK. Even if it wanted to, it likely doesn’t have the resources.

That being said, BDO – a UK-based accounting firm, notes that the UK will aim to implement the OECD’s Crypto-Asset Reporting Framework standards by 2027. In simple terms, this means that crypto exchanges serving UK residents might need to report transactions to HMRC.

Ultimately, it’s best to remain compliant with crypto taxes in the UK. This means reporting all relevant transactions to HMRC within the allocated time frame.

Are There Ways to Reduce How Much Crypto Tax You Pay in the UK?

Read on to discover legal ways to reduce crypto taxes in the UK.

Maximize Capital Gains Allowances

If you’re planning to sell crypto in the UK, make sure you maximize your capital gains allowances. As we’ve established, you’ll get up to £6,000 in 2023/24 and £3,000 in 2024/25.

So, suppose you originally bought 1 BTC for £24,000. It’s now March 2024 and 1 BTC is worth £33,000. If you sell the entire 1 BTC now, you’d have capital gains of £9,000 (£33,000 – £24,000). After subtracting your £6,000 allowance, you’re left with capital gains of £3,000.

However, a smarter move could be to sell just £30,000 worth. You’d be left with capital gains of £6,000, which means you’re using your full allowance for 2023/24. You could then sell the remaining £3,000 in the 2024/25 tax year, which begins on April 6th, 2024. In doing so, you’d use your capital gains allowance, meaning no tax is due.

That said, making partial sales can be risky. After all, the value of your crypto investment could decline rapidly after making the first sale.

Tax-Loss Harvesting

Tax-loss harvesting is a perfectly legal strategy in the UK.  It involves selling an asset at a loss. The loss can then be offset against capital gains in the same tax year.

However, investors must consider HMRC’s bed and breakfasting rule before proceeding. This stipulates that the asset sold for a loss cannot be repurchased within 30 days. If it is, you lose the tax advantage.

Here’s an example of how tax-loss harvesting can reduce your crypto taxes in the UK:

• Let’s suppose that in the 2023/24 tax year, you made crypto capital gains of £20,000.
• After leveraging your £6,000 annual allowance, your capital gains are reduced to £14,000.
• In the same year, you’re also holding Amazon shares. When you elected to buy Amazon shares, you invested £15,000. However, the Amazon shares are now worth £9,000.
• If you sell, you’d make a £6,000 capital loss. This £6,000 loss can be offset against your £14,000 crypto gain. This means your taxable gains have been reduced to £8,000.

Once 30 days have passed, you no longer need to worry about the bed and breakfasting rule. This means you can repurchase Amazon shares.

However, this strategy isn’t without its risks. While waiting for the 30-day rule to pass, Amazon shares might have increased. This means you’ve missed out on capital gains. You’d also need to repurchase the shares at a higher price.

Gifting Crypto to a Spouse or Civil Partner

Another tax-reduction strategy is to gift crypto to a spouse or civil partner. In doing so, you won’t pay tax when making the transfer.

This can be beneficial if:

• The receiver is a basic-rate taxpayer
• The receiver hasn’t used their capital gains allowance

For example, let’s suppose that you’re a higher-rate payer. Your crypto investment is currently in profit by £7,000. You’ve already used your capital gains allowance of £6,000. Therefore, if you sell, you’ll pay 20% on the entire £7,000 gain.

Instead of selling, you transfer the crypto to your spouse. They’re a basic-rate payer and haven’t used their £6,000 capital gains allowance. This reduces the capital gain from £7,000 to £1,000. As a basic-rate payer, the capital gains tax on the £1,000 profit is 10%. Therefore, your spouse would pay just £100 in capital gains tax.

To reiterate, this strategy is only suitable if you’re gifting to a spouse or civil partner. Gifting crypto to anyone else will be considered a disposal by HMRC.

Can You Claim Crypto Losses on Taxes in the UK?

HMRC allows UK residents to offset crypto losses. However, losses can only be offset against other capital gains.

• For example, let’s suppose you buy Bitcoin in May 2024. You invested £30,000.
• In September 2024, you sell all of your Bitcoin for £20,000. That’s a capital loss of £10,000.
• In the same year, you made capital gains of £17,000 from a stock investment.
• You can use the £10,000 crypto loss against the £17,000 stock gain. This leaves you with £7,000 worth of capital gains for the year.

So what happens if you made a crypto loss but don’t have any capital gains to offset it against? In this instance, HMRC allows you to carry the losses forward to future years. There is no time limit, meaning losses are carried forward indefinitely. What’s more, you’ll only need to use your capital losses after you’ve factored in your annual allowances.

However, do note that crypto losses can’t be used to reduce your income taxes. As mentioned, they can only be used against capital gains.

Conclusion

In summary, crypto taxes can no longer be ignored in the UK. Make sure you keep adequate records for all transactions. Not only capital gains and losses but crypto income too. Consider the tax implications before making a disposal and aim to maximize annual allowances.

Ultimately, it’s wise to speak with a qualified tax advisor with experience in digital assets. Not only will they ensure you’re compliant with HMRC but they can suggest legal tax-reduction strategies.

References

• https://www.gov.uk/guidance/pay-tax-on-cryptoassets
• https://www.gov.uk/capital-gains-tax/rates
• https://www.gov.uk/tax-buy-shares
• https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto21150
• https://www.gov.uk/inheritance-tax/gifts
• https://www.gov.uk/self-assessment-tax-returns
• https://www.gov.uk/guidance/tell-hmrc-about-unpaid-tax-on-cryptoassets
• https://www.bdo.co.uk/en-gb/news/2023/hmrc-launches-new-campaign-to-pursue-unpaid-tax-from-crypto-investors#
• https://www.gov.uk/capital-gains-tax/losses
• https://www.telegraph.co.uk/money/investing/stocks-shares/bitcoin-how-add-isa-profit-tax-free-2021/
• https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg13370

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Kane Pepi

Editor

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Kane Pepi

Editor

Kane Pepi is an accomplished financial and cryptocurrency writer who has an extensive portfolio of over 2,000 articles, guides, and market insights. With his expertise in specialized subjects such as asset valuation and analysis, portfolio management, and financial crime prevention, Kane has built a reputation for providing clear explanations of complex financial topics. He holds a Bachelor's Degree in Finance and a Master's Degree in Financial Crime, and is currently pursuing his Doctorate degree, which focuses on investigating the complexities of money laundering in the cryptocurrency and blockchain technology sectors. Kane's wealth of knowledge and experience in the field make…

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