Disclaimer: This page is for general information purposes only and should not be used as a substitute for consultation with tax professionals. By continuing on this page, you hereby acknowledge and agree that Crypto.com has not provided any tax advice, you will rely on your own tax counsel with respect to your tax obligations, and Crypto.com has made no representations or guarantees about the accuracy, completeness, or applicability of any information on this page. Further, you acknowledge and agree that any examples or calculations provided on this page are for illustrative purposes only and may not apply to you or your use of any of Crypto.com’s services, notwithstanding any apparent similarities between the fact patterns presented in such examples and those relevant to your individual circumstances. Crypto.com is not responsible for any third-party material referenced on this page, and the inclusion of any third-party material on this page should not be construed as Crypto.com’s support of, agreement with, or attestation to the accuracy or applicability of such material. The general tax guidance on HM Revenue and Customs (HMRC) does not explicitly address the various cryptocurrency transactions and resulting tax implications. Guidance from the HMRC may be supported or challenged by the United Kingdom courts.

By using this site and continuing on this page, you agree to the Crypto.com Tax Terms & Conditions.

Yes, cryptocurrency is taxable in a variety of circumstances. The taxable events of crypto transactions are generally characterized as either capital gain (or loss) or income, depending on the type of transactions. In general, you may need to report a transaction on your United Kingdom individual income tax return when you dispose of cryptocurrency. In the website of HMRC, disposition of crypto means as follows:

Cryptocurrency could be subject to Income Tax or Capital Gains Tax. If you earn taxable crypto income, it may be taxed as ordinary income at its fair market value (FMV) on the date you receive it.

If you are a typical crypto investor, who treats trading cryptocurrency as a hobby, you may pay capital gain tax on the capital gain made from disposition of your crypto asset. In such a scenario, the taxable income would be calculated based on the net proceeds (i.e. proceeds less any selling transaction fee) less the adjusted cost basis of the crypto.

On the other hand, if you are running a crypto business (not hobby intent), the income from disposition would be considered as business income/loss. Note: Crypto.com Tax does not support business intent transactions currently. Therefore, this may not be the right tool for you if your crypto transactions constitute business activities as opposed to hobby transactions.

You need to report your taxable crypto transactions on your Income Tax return for individuals (SA 100 form). Subject to any applicable extensions, the income tax filing deadline is the end of January every year if you lodge the online tax return. The deadline would be the end of October if you lodge the paper tax return.

The capital gains tax rate varies based on your tax bracket. Your capital gains will be taxed under the same rates regardless of your holding period of the crypto. Please refer to the HMRC website for more details on the capital gains tax rates.

In general, capital losses mean that the amount you spent when you bought or received the crypto (its adjusted cost basis) exceeds the proceeds you received for its sale. You do not pay tax on capital losses, but you can offset your capital gains with those losses.

If your capital losses exceed your capital gains, you may carry forward the unutilized losses to future tax years. There is no time limit on how long you can carry forward the unutilized losses. However, capital losses must be registered with the HMRC within 4 years after the end of the tax year that you made such losses. You may refer to the HMRC website for more details about the allowable capital losses.

Crypto.com Tax* is a user-friendly tax product to generate tax reports for tax filing. You may follow below steps to finish the crypto tax filing:

*Crypto.com Tax does not provide tax advice and is not intended to be a substitute for consultation with your own tax professional.

When you have multiple crypto investments and transactions, cost basis methods dictate the way you calculate the cost basis of your crypto. Critically, cost basis methods affect how your capital gains are calculated.

The HMRC only allows users to use Share Pooling as the cost basis method when calculating the taxes. To identify a cost to "match" against the disposal, specific matching rules must be applied. Disposals are matched to assets purchased in the following order:

All disposals of the same type of asset that take place on the same day are treated as one single transaction. Please see our FAQ and HMRC website for more details on the share pooling method.

Crypto purchases with fiat money (e.g. GBP --> BTC) are not subject to tax; however, it’s extremely important to keep track of the acquisition cost (including associated fees), as it becomes the cost basis of the crypto and will be used for calculating capital gains/losses for subsequent taxable events (i.e., dispositions / sales).

Generally, transferring crypto between your own accounts is tax-free when the associated fee is in fiat.

However, you may need to pay tax if the associated fee is in crypto as the difference between the FMV of the crypto disposed to settle the fee and its adjusted cost basis may result in capital gain/loss. See additional information on fees below.

In general, donation is not subject to capital gain/loss and is entitled to income tax relief when the donor does not receive anything for return. However, there are two exceptions:

For more information on tax relief on donations, you may refer to the HMRC website.

A token swap/migration occurs whenever an old coin is exchanged for a new coin (e.g. MCO converting to CRO). It is generally not considered a taxable event when the associated fee is in fiat. The tax logic is the same as a transfer.

However, if the associated fee is settled in crypto, there may be a difference between the FMV and adjusted cost basis of the crypto used to settle the fee, which may result in capital gain/loss. See additional information on fees below.

Sale of crypto for fiat currency (e.g. BTC --> GBP) is a taxable and reportable event. The capital gains/losses can be calculated by subtracting the cost basis and the associated fees from the proceeds. You may refer to the examples below illustrating the share pooling method.

Example 1:

You made below transactions on the respective dates:

Results:

Since there is a purchase on the same day of disposal (i.e. 10 Aug 2020), we should deduct the cost basis of the same day first. If there are no purchases within 30 days after the disposal, we can take the weighted average from the section 104 pool to calculate the cost basis.

Cost basis per coin (same day rule): GBP 8,000/4 = GBP 2,000 per ETH

Cost basis per coin (section 104 pool): GBP (10,000+8,000)/15 = GBP 1,200 per ETH

Proceeds: GBP 10,000

Total cost basis for 5 ETH: GBP 1,200 + GBP 2,000 * 4 = GBP 9,200

Capital gain/loss: GBP 10,000 - 9,200 = GBP 800

Example 2:

You made below transactions on the respective dates:

Results:

Since there are no purchases on the same day of disposal, we can deduct the cost basis during the 30-day period (i.e. 20 Aug 2020) before using the weighted average from the section 104 pool to calculate the cost basis.

Cost basis per coin (30-day rule): GBP 4,000/4 = GBP 1,000 per ETH

Cost basis per coin (section 104 pool): GBP (10,000+8,000)/15 = GBP 1,200 per ETH

Proceeds: GBP 10,000

Total cost basis for 5 ETH: GBP 1,200 + GBP 1,000 * 4 = GBP 5,200

Capital gain/loss: GBP 10,000 - 5,200 = GBP 4,800

Example 3:

You made below transactions on the respective dates:

Results:

Since no assets are acquired on the same day/within 30 days after the disposal, neither the same day nor the “bed and breakfasting” rule apply in this case. The section 104 pool would be applicable to calculate the cost basis in this case.

Cost basis per coin (section 104 pool): GBP (10,000+8,000)/15 = GBP 1,200 per ETH

Proceeds: GBP 10,000

Total cost basis for 5 ETH: GBP 1,200 * 5 = GBP 6,000

Capital gain/loss: GBP 10,000 - 6,000 = GBP 4,000

Yes, exchanges of one crypto for another crypto (e.g. ETH --> BTC) are generally taxable and reportable events. The capital gains/losses can be calculated by subtracting the cost basis from the FMV of the coins you receive.

Example:

You bought 10 ETH for GBP 10,000 and then sold 5 ETH for 1 BTC. The FMV per BTC is GBP 12,000.

Results:

Cost basis per coin: GBP 10,000/10 = GBP 1,000 per ETH

Proceeds: GBP 12,000

Total cost basis for 5 ETH: GBP 1,000 * 5 = GBP 5,000

Capital gain/loss: GBP 12,000 - 5,000 = GBP 7,000

Paying for goods and services with crypto generally results in a taxable event due to the disposition of the crypto. The capital gains/losses can be calculated by subtracting the cost basis from the FMV of the coins you spend.

Example:

You bought 10 ETH for GBP 10,000 and then paid 5 ETH for some services. The FMV per ETH is GBP 2,000.

Results:

Cost basis per coin: GBP 10,000/10 = GBP 1,000 per ETH

Proceeds: GBP 2,000 * 5 = GBP 10,000

Total cost basis for 5 ETH: GBP 1,000 * 5 = GBP 5,000

Capital gain/loss: GBP 10,000 - 5,000 = GBP 5,000

Yes, sending a gift in crypto to people other than your spouse is generally taxable as it results in the disposition of the crypto. The capital gains/losses can be calculated by subtracting the cost basis from the FMV of the coins on the date of gifting.

When the crypto is ultimately sold by the recipient of the gift, the proceeds of disposition is the FMV on this date.

Example:

You bought 10 ETH for GBP 10,000 and then sent 5 ETH to friends as a gift. The FMV per ETH is GBP 2,000.

Results:

Cost basis per coin: GBP 10,000/10 = GBP 1,000 per ETH

Proceeds: GBP 2,000 * 5 = GBP 10,000

Total cost basis for 5 ETH: GBP 1,000 * 5 = GBP 5,000

Capital gain/loss: GBP 10,000 - 5,000 = GBP 5,000

Crypto mining is generally taxable at the time of receipt. Your miscellaneous income will be equal to the FMV of the new crypto when it is received. Also, you may be subject to capital gains/losses when the mined coins are disposed (i.e. sold). The cost basis of received coins is equal to its FMV at the time of receipt. The capital gain/loss is calculated by subtracting the cost basis from the FMV of the crypto on the date of disposition. On the other hand, the related cost of mining (e.g. electricity costs, buying equipment) is categorized as allowable expenses for deduction to the taxable income.

Example:

You received 10 ETH from mining where the FMV per ETH is GBP 10,000. You then sold 1 ETH for GBP 12,000.

Results:

Cost basis per coin: 10,000 per ETH

Proceeds: GBP 12,000

Total cost basis for 1 ETH: GBP 10,000

Capital gain/loss: GBP 12,000 - 10,000 = GBP 2,000

Hard fork takes place when there is a split on the new crypto that you currently hold. The new coins from forks are generally taxable at the time of receipt. Also, the new coins/tokens may be subject to capital gains/losses at dispositions. The calculation of capital gains/losses is the same as mining only when you do not know the cost basis of the original token. According to HMRC guidance, costs must be split on a 'just and reasonable basis'. HMRC has not dictated any specific rules for apportioning. You may refer to the HMRC website for more information.

In addition, in a soft fork that does not create a new coin, you would not be deemed to have received any income.

Airdrops are basically some free coins you received from a marketing campaign or events.

In general, new coins from airdrops are taxable at the time of receipt. The FMV of the new coin when it is received will be treated as your miscellaneous income. Also, the new coins may be subject to capital gains/losses at dispositions. The cost basis of the received coins is equal to its FMV at the time of receipt. The calculation of capital gains/losses is the same as mining.

You can get crypto rewards in several ways, e.g. stake/earn rewards and bonus, referral bonus.

In general, the reward income is taxable at the time of receipt. The FMV of crypto rewards received will be treated as your miscellaneous income. Also, you may be subject to capital gains/losses when you dispose the crypto rewards. The cost basis of the received coins is equal to its FMV at the time of receipt. The calculation of capital gains/losses is the same as mining.

Receiving a crypto gift is not taxable at the time of receipt. However, the received coins may be subject to capital gains/losses at dispositions. The cost basis of the received coins is the FMV of the coins on the date of receipt. The calculation of capital gains/losses is the same as mining.

If you receive a crypto payment as a form of compensation, it may be considered as your employment income.

The FMV of received coins would be treated as part of your taxable employment income for that year and would be reported on the employment form - SA 102. Received coins from wages may be also subject to income tax withholding.

Each individual is responsible for calculating and reporting income on their individual tax return even if the payor (e.g., employer) has not supplied appropriate documentation. It is your responsibility to consult a tax professional to ensure you have fulfilled your tax obligations.

The FMV of the crypto received as compensation will be your cost basis for such crypto assets in the event of a future disposition.

Example:

You received 10 ETH as salary where the FMV per ETH is GBP 1,000. You then sold 5 ETH for 1 BTC where the FMV per BTC is GBP 12,000.

Results:

Proceeds: GBP 12,000

Total cost basis for 5 ETH: GBP 1,000 * 5 = GBP 5,000

Capital gain/loss: GBP 12,000 - 5,000 = GBP 7,000

Note: GBP 10,000 (10 ETH @ FMV of GBP 1,000 each) should be reported as income from wages/salaries at the time of receipt.

Note: In general, on the Crypto.com platform, you can only get rebates from certain credit card and staking transactions (as of the time of this article’s publication). Please see the Crypto.com terms and conditions for eligibility criteria and other details on rebates.

In cases of rebates associated with spending transactions (e.g., credit card spends), rebates (including any received in the form of crypto coin/token) generally are not taxable at the time of receipt. However, like other crypto, they are subject to capital gains/losses at disposition. The cost basis of the received coin/token is equal to the FMV at the time of receipt. The calculation of capital gains/losses is the same as mining.

Example:

You received 0.1 ETH from rebates where FMV per ETH is GBP 10,000. You then sold 0.1 ETH for GBP 1,200.

Results:

Proceeds: GBP 1,200

Cost basis per coin: GBP 10,000 per ETH

Total cost basis for 0.1 ETH: GBP 10,000 * 0.1 = GBP 1,000

Capital gain/loss: GBP 1,200 - 1,000 = GBP 200

You may incur expenses when a blockchain transaction is approved/failed/canceled. For example, when a gas fee is charged due to a failed blockchain transaction.

These transaction costs may be subject to capital gains/losses. The capital gains/losses, where applicable, can be calculated by subtracting the cost basis from the FMV of the coins charged. The FMV of the coins may be considered as an allowable miscellaneous expense that can offset miscellaneous income.

Example:

You bought 2 ETH for GBP 2,000 and 0.1 ETH is charged due to a failed blockchain transaction where the FMV per ETH is GBP 1,500.

Results:

Proceeds (due to disposition of 0.1 ETH to cover the gas fee): GBP 1,500 * 0.1 = GBP 150

Cost basis per coin: GBP 2,000/2 = GBP 1,000

Total cost basis for 0.1 ETH: GBP 1,000 * 0.1 = GBP 100

Capital gain/loss: GBP 150 - 100 = GBP 50

Note: Miscellaneous expense of USD 150 may be tax deductible for income tax purposes.

Margin trading of crypto would generally incur capital gain/loss in the following cases:

- Closing the position

- Payment of margin interest with crypto

- Forced sale of your collateral by exchanges (i.e. a margin call)

Crypto.com Tax does not support margin trading transactions at this moment. Please consult your tax advisor if you’re actively involved in margin trading.

Fees can show up in all kinds of cryptocurrency transactions and is often the most cryptic part when calculating taxes. The tax treatment of fees depends on whether the fees are incurred in taxable or non-taxable transactions. You may also need to consider if the transaction fee is paid in cryptocurrency.

Typically in a non-taxable event (e.g. buying crypto), the FMV of the fee will be added to the cost basis of the resulting coins. Thus, in this example, the transaction fees you pay upon purchase will be considered as part of the cost basis if and when a disposition eventually happens and will reduce the capital gain.

However, transfer and swap transactions generally are exceptions to the aforementioned mechanism. The fees associated with such transactions generally are not included in the cost basis and no deduction is available because its intention is to hold the crypto for investment purposes rather than disposition/acquisition of crypto.

Example 1:

You bought 10 ETH for GBP 10,000, with a purchase fee of GBP 100.

Results:

Cost basis per coin: GBP (10,000 + 100) / 10 = GBP 1,010 per ETH

Example 2:

You bought 10 ETH for GBP 10,000 in account A. You then transferred 5 ETH from account A to account B, with a transfer fee of GBP 50.

Results:

Cost basis per coin in account A: GBP 10,000 / 10 = GBP 1,000 per ETH

Cost basis per coin in account B: GBP (1,000 * 5 ) / 5 = GBP 1,000 per ETH

In a taxable event (e.g. selling / trading crypto), the FMV of the fee is generally considered to be an expense, which is typically included in the cost basis and deducted from the proceeds when calculating capital gain/loss.

Example:

You bought 10 ETH for GBP 10,000. You then sold 5 ETH for GBP 10,000, with a selling fee of GBP 100.

Results:

Proceeds: GBP 10,000

Cost basis per coin: GBP 10,000/10 = GBP 1,000 per ETH

Total expense: GBP 100

Total cost basis for 5 ETH: GBP 1,000 * 5 + GBP 100 = GBP 5,100

Capital gain/loss: GBP 10,000 - 5,100 = GBP 4,900

When the transaction fee is in crypto, it should be valued at FMV and would generally result in a capital gain/loss separately as it would be deemed a disposition of capital property. Therefore, in taxable events, your transaction may result in 2 separate reportable capital gains/losses, each of which should be separately listed in your transaction records.

For non-taxable events, you would just need to calculate the capital gain/loss from the fee. Note that in a transfer transaction, the FMV of the fee cannot be added to the resulting coin's cost basis.

Example 1: Buying crypto

You bought 10 ETH for GBP 10,000. You then bought 5,000 CRO for GBP 1,000 with a transaction fee of 0.1 ETH. Assume the ETH price has gone up to GBP 2,000 on the day of buying CRO.

Results:

Cost basis per ETH: GBP 10,000/10 = GBP 1,000 per ETH

Transaction fee of 0.1 ETH: GBP 2,000 * 0.1 = GBP 200

Cost basis per CRO: GBP (1,000 + 200)/5,000 = GBP 0.24 per CRO

Capital gain/loss from the fee = GBP (2,000 - 1,000) * 0.1 = GBP 100

Example 2: Transferring crypto

You bought 10 ETH for GBP 10,000 in account A. You then transferred 5 ETH from account A to account B, with a transfer fee of 0.1 ETH. Assume the ETH price has gone up to GBP 2,000 on the day of transfer.

Results:

Cost basis per coin in account A: GBP 10,000/10 = GBP 1,000 per ETH

Cost basis per coin in account B: GBP (1,000 * 5 )/5 = GBP 1,000 per ETH

Capital gain/loss from the fee = GBP (2,000 - 1,000) * 0.1 = GBP 100

Example 3: Selling crypto

You bought 10 ETH for GBP 10,000 and then sold 5 ETH for GBP 10,000, with a selling fee of 0.1 ETH. We know the ETH price is GBP 2,000 on the day of sale.

Results:

Proceeds: GBP 10,000

Cost basis per coin: GBP 10,000/10 = GBP 1,000 per ETH

Total expense: GBP 2,000 * 0.1 = GBP 200

Total cost basis for 5 ETH: GBP 1,000 * 5 + GBP 200 = GBP 5,200

Capital gain/loss on transaction: GBP 10,000 - 5,200 = GBP 4,800

Capital gain/loss on fee: GBP (2,000 - 1,000) * 0.1 = GBP 100

Total capital gain/loss: GBP 4,800 + 100 = GBP 4,900

It is important to keep track of your crypto transactions as well as the market value of the crypto at critical junctures throughout these activities. The HMRC provides general guidance that a taxpayer should maintain accurate and complete records for at least 22 months after the end of the tax year the tax return is for. According to the HMRC website, you should keep records of your crypto transactions documenting the type of crypto assets, date of transactions, value of transactions, etc.

If you are a Crypto.com Tax user, it's easy to keep proper records of your crypto activities by simply syncing your wallets/exchanges or importing your transactions on Crypto.com Tax.