Tax · HMRC · UK Reference
Crypto Tax 101: Capital Gains vs Income Tax in the UK
Published 27 April 2026
UK tax law treats cryptoassets differently depending on how you acquire and use them. Most individuals who buy and sell tokens for investment purposes fall under Capital Gains Tax rules — but staking, mining, airdrops and lending yields may trigger Income Tax instead. This guide explains the key distinctions using HMRC's published guidance. It is general information only; always consult a qualified tax professional for advice on your personal position.
- The 30-day "bed and breakfast" rule is unique to UK tax law — timing trades incorrectly has consequences
- The CGT annual exempt amount for 2025–26 is £3,000 — gains above this threshold are taxable
- Staking and mining rewards are typically taxed as income at the point of receipt
- HMRC expects detailed records of every transaction, including GBP values at the time
The foundation
Section 104 pooling
HMRC's cryptoasset manual explains that when you buy fungible tokens — Bitcoin, Ether, and most other traded cryptocurrencies — you do not identify specific tokens when you later dispose of them. Instead, each type of token forms its own Section 104 pool. The pool tracks the total amount spent and the total number of tokens held. When you sell, the acquisition cost is calculated on an average-cost basis from the pool.
Non-fungible tokens (NFTs) are separately identifiable assets and are not pooled — each NFT is treated as a discrete holding.
Accurate pool records are essential. If you hold the same token across multiple exchanges (for example, BTC on both Coinbase and Kraken), those holdings all form part of the same Section 104 pool regardless of where they sit. The Coinbase & Kraken UK reference guide covers how to export transaction history from each platform to assist with this.
What this means
HMRC treats crypto disposals — including swaps between coins — as taxable events. Every trade, not just a GBP cash-out, can create a Capital Gains Tax liability. Keeping accurate records from day one matters significantly. This is context, not advice.
Anti-avoidance rules
Same-day and 30-day matching rules
Before using the Section 104 pool, HMRC applies two anti-avoidance rules in order:
- Same-day rule: If you buy and sell tokens of the same type on the same day, those acquisitions and disposals must be matched against each other first. Only the remaining tokens move into or out of the Section 104 pool.
- 30-day "bed and breakfast" rule: If you sell tokens and then buy the same type within 30 days of the disposal, the new acquisition is matched with the earlier sale. This prevents investors from realising a loss and immediately repurchasing the same tokens to reset their cost basis. This rule is unique to UK tax law — other jurisdictions often permit immediate repurchases, so UK taxpayers need to be particularly careful when timing trades around year-end or during market downturns.
Only after applying both rules do you use the Section 104 pool to calculate gains or losses on the remaining tokens.
HMRC's detailed crypto tax guidance, combined with the incoming CARF data-sharing framework, means the UK tax authority will have more visibility into crypto activity than most investors currently assume.
Allowances and rates
The annual CGT exempt amount
For the 2025–26 tax year, the Capital Gains Tax annual exempt amount is £3,000 for individuals. Gains within this allowance are tax-free; CGT is only due on gains above the allowance. The exempt amount can change each year, so check HMRC's latest rates before filing your return. Couples may benefit from two separate allowances if assets are held independently in each person's name.
CGT rates on crypto gains depend on your total taxable income: gains that fall within the basic-rate income tax band are currently taxed at 18%; gains above that threshold are taxed at 24%. These rates apply from April 2024 following changes announced in the Autumn 2024 Budget — confirm the current position at HMRC's website before filing.
When it's not CGT
Activities that produce income
Most personal crypto transactions — buying tokens and later selling them for a profit — are investment activity and fall under CGT. However, several activities produce income taxable under Income Tax:
- Staking and validator rewards: If you stake tokens and receive new tokens as a reward, the pound-sterling value at the time of receipt is taxable as miscellaneous income (reported on your Self Assessment return), unless the activity amounts to a trade. When you later sell those reward tokens, any increase in value since receipt is subject to CGT. For the regulatory context around staking in the UK, see the staking and yield guide.
- Mining: Where mining is carried out as a hobby rather than a trade, tokens received are taxed as miscellaneous income. If the activity is conducted with significant frequency, organisation and commercial intent, HMRC may treat it as a trade — in which case profits are subject to Income Tax and National Insurance.
- Airdrops: Tokens received through airdrops are treated as miscellaneous income where they are received in exchange for something (e.g. promoting a project). Where no action was required, HMRC's position is more nuanced — seek specific advice.
- DeFi and lending yields: Interest earned from lending tokens or participating in DeFi yield protocols is treated as income when received. Check whether the platform provides a statement showing the amount and date of each receipt.
Your obligations
Record-keeping
HMRC expects you to maintain records of every crypto transaction, including: the date, the number of tokens, the value in pound sterling at the time, the pool balance before and after, and any fees paid. The GBP value must be determined at the time of each transaction — historical exchange rates are available from HMRC's approved sources.
Portfolio tracking tools such as Koinly, CoinTracking and Accointing can assist with record-keeping and CGT calculations, but the accuracy of the output depends on the completeness of your input data. You remain personally responsible for the figures on your Self Assessment return. If your position is complex — for example if you have used DeFi protocols, received staking rewards from multiple validators, or made a large number of trades — professional advice from a tax adviser with crypto experience is worthwhile.
Related reading
Connected topics
- Staking & Yield in the UK — the regulatory and income tax context for staking rewards in more detail.
- Inheritance & Crypto — how cryptoassets are treated for Inheritance Tax purposes and how to plan your estate.
- Coinbase & Kraken UK Reference Guide — how to export trade history from both exchanges for tax reporting purposes.