Capital Gains Tax Calculations On Cryptocurrency Disposals
- Adil Akhtar
- Jul 24
- 15 min read
Understanding Capital Gains Tax on Cryptocurrency in the UK for 2025-26
What Exactly Is a Crypto Disposal and Why Does It Trigger CGT?
Now, if you’re holding Bitcoin or Ethereum in a wallet, you might think you’re in the clear tax-wise until you cash out to pounds. Not quite! HMRC treats cryptocurrencies as “chargeable assets,” meaning any “disposal” can trigger Capital Gains Tax (CGT). A disposal isn’t just selling for GBP—it includes trading one crypto for another (say, Bitcoin for Ethereum), spending crypto on goods or services, or even gifting it to someone other than your spouse or civil partner. For the 2025-26 tax year, HMRC’s stance remains firm: crypto is property, not currency, so it’s taxed like shares or real estate.
Disposals are taxable because they realise a gain (or loss) based on the change in value from when you acquired the crypto to when you disposed of it. For example, if you bought 1 BTC for £10,000 and traded it for ETH when it was worth £15,000, that £5,000 gain is taxable. The catch? You need to calculate this in GBP using the market value at the time of disposal, which can be a headache with volatile crypto prices. HMRC’s Cryptoassets Manual (available at www.gov.uk/hmrc-internal-manuals/cryptoassets-manual) is your go-to for official guidance.
What Are the CGT Rates and Allowances for 2025-26?
None of us loves paying taxes, but knowing the rates can help you plan. For the 2025-26 tax year, the CGT allowance, or Annual Exempt Amount, is £3,000, meaning you can make up to £3,000 in total capital gains (from crypto and other assets like shares) tax-free. This is a sharp drop from £6,000 in 2023-24, so every pound counts. Gains above this are taxed based on your income tax band, with rates updated in the Autumn Budget 2024 (effective from 30 October 2024):
Table 1: CGT Rates for Cryptocurrency Disposals (2025-26 Tax Year)
If your taxable income (after your £12,570 personal allowance) plus your gains pushes you into a higher band, the portion of gains in that band is taxed at the higher rate. For instance, if you earn £40,000 from your job and have £15,000 in crypto gains, the first £10,270 of gains (up to the £50,270 basic rate threshold) is taxed at 18%, and the rest at 24%.
What Transactions Are Taxable (and Which Aren’t)?
So, the question is: what exactly counts as a taxable event? HMRC’s definition of a disposal is broad, covering:
● Selling crypto for fiat currency (e.g., GBP).
● Trading one crypto for another (e.g., BTC for ETH).
● Spending crypto on goods or services (e.g., buying a laptop with Bitcoin).
● Gifting crypto to anyone except your spouse or civil partner (gifts to them are tax-free).
● Donating crypto to charity (though you may claim relief on the gain).
But not every move triggers tax. Holding crypto in a wallet? Tax-free. Buying crypto with GBP? Tax-free. Transferring crypto between your own wallets or exchanges? Also tax-free, but here’s the kicker: if you pay transfer fees in crypto (e.g., gas fees in ETH), that’s a disposal, and any profit on the crypto used for the fee is taxable.
Let’s consider a quick example. Priya, a graphic designer in Manchester, transfers 0.1 ETH between her wallets. No tax there. But the transaction fee of 0.01 ETH, worth £20 when she paid it (bought at £10), means she has a £10 gain on the fee alone, which is taxable if her total gains exceed the £3,000 allowance.
How Does Income Tax Fit In?
Now, it shouldn’t be a surprise that not all crypto transactions fall under CGT. If you earn crypto as income—say, through mining, staking, or getting paid in crypto for freelance work—it’s subject to Income Tax, not CGT. The rates depend on your income band:
Table 2: Income Tax Rates for Crypto Income (2025-26 Tax Year)
For example, if Tariq, a Bristol-based coder, earns 0.5 ETH (worth £1,000) for a project, he pays Income Tax on that £1,000 at his marginal rate. If he later sells that ETH for £1,500, the £500 gain is subject to CGT. This dual taxation can catch people out, so track whether your crypto is income or capital.
Why Record-Keeping Is Your Best Friend
Be careful! HMRC is cracking down on crypto tax compliance, with “nudge letters” sent in August 2024 to suspected under-reporters. You need to keep detailed records of every transaction: dates, amounts, GBP values, and wallet addresses. Why? Because HMRC might ask for them during a compliance check, and exchanges may not keep records forever. Tools like Koinly or CoinLedger can help, but you’ll still need to verify their reports, as they don’t always account for HMRC’s specific cost basis rules.
How to Calculate and Report Capital Gains Tax on Cryptocurrency in the UK for 2025-26
How Do You Calculate Your Crypto Gains or Losses?
Now, let’s get to the meat of it: working out your capital gains or losses on crypto disposals. It’s not as simple as “bought low, sold high.” HMRC requires you to calculate the gain (or loss) for each disposal by comparing the disposal value (market value in GBP at the time of disposal) to the cost basis (what you paid for the crypto, plus allowable costs like transaction fees). The formula is straightforward:
Gain = Disposal Value - Cost Basis
But here’s where it gets tricky: crypto’s volatility means you need accurate GBP values for every transaction, and HMRC’s pooling rules make it more complex. Let’s break it down.
For example, imagine Ayesha, a teacher in Leeds, bought 1 BTC for £10,000 in 2023 and sold it for £15,000 in April 2025. Her gain is £15,000 - £10,000 = £5,000. If she also paid £50 in transaction fees to buy and £30 to sell, her cost basis becomes £10,050, and her disposal value is £14,970, so the gain is £4,920. Simple enough, right? But what if she bought multiple batches of BTC over time? That’s where pooling comes in.
What Are HMRC’s Pooling Rules for Crypto?
None of us wants to track every single crypto purchase individually, and thankfully, HMRC doesn’t make you—sort of. They use Section 104 pooling, treating all your holdings of a single crypto (e.g., all your Bitcoin) as one “pool.” Each time you buy or receive more of that crypto, it gets added to the pool, and the cost basis is averaged across all acquisitions. When you dispose of some crypto, you take a proportional share of the pool’s cost basis.
Here’s how it works:
● Same Day Rule: If you buy and sell the same crypto on the same day, match those transactions first to calculate the gain.
● Bed and Breakfast Rule: If you sell crypto and buy it back within 30 days, match the sale to the later purchase to prevent tax avoidance.
● Section 104 Pool: For all other disposals, use the average cost basis of the pool.
Table 3: Example of Section 104 Pooling for Bitcoin
In this table, when Ayesha sells 0.4 BTC, the cost basis is £4,750 (proportional to the pool), and her gain is £6,000 - £4,750 = £1,250. The pool’s remaining cost basis is £4,750 for 0.4 BTC.
How Do You Handle Crypto-to-Crypto Trades?
So, the question is: what happens when you trade one crypto for another, like swapping ETH for SOL? HMRC treats this as two transactions: you dispose of the first crypto (ETH) and acquire the second (SOL). You calculate the gain on the ETH disposal using its market value in GBP at the time of the trade, and that GBP value becomes the cost basis for the SOL you acquire.
For instance, Khalid, a Birmingham-based freelancer, trades 2 ETH (bought for £2,000) for SOL when ETH is worth £3,000. His gain on the ETH disposal is £1,000, which is taxable. The SOL he receives has a cost basis of £3,000. If he later sells the SOL for £4,000, he’ll calculate a further gain of £1,000. Tracking these trades is crucial, as HMRC expects you to report each disposal separately.
Step-by-Step Guide to Calculating CGT on Crypto Disposals
Now, consider this: if you’re feeling overwhelmed, a clear process can make this manageable. Here’s a step-by-step guide to calculate your CGT for 2025-26:
List All Disposals: Identify every taxable event (sales, trades, spending, etc.) in the tax year (6 April 2025 to 5 April 2026). Use exchange records or blockchain explorers for accuracy.
Determine GBP Values: For each disposal, find the market value in GBP using historical price data from reputable sources like CoinGecko or exchange records. For fees, include their GBP value too.
Calculate Cost Basis: Apply HMRC’s pooling rules (Same Day, Bed and Breakfast, Section 104). Include allowable costs like transaction fees or exchange fees.
Compute Gains or Losses: Subtract the cost basis from the disposal value for each transaction. Sum all gains and losses for the year.
Apply the CGT Allowance: Deduct the £3,000 annual exempt amount from your total gains. If you have losses, offset them against gains first.
Calculate Taxable Gains: Apply the appropriate CGT rate (18% or 24%) based on your income tax band.
Report to HMRC: Include your gains in your Self-Assessment tax return, due by 31 January 2027 for the 2025-26 tax year.
How Do You Report Crypto Gains to HMRC?
Be careful! Missing your Self-Assessment deadline or under-reporting gains can lead to penalties. You report crypto gains through the Capital Gains section of your Self-Assessment tax return on www.gov.uk/log-in-file-self-assessment-tax-return. If you’re not already registered, you’ll need to sign up by 5 October 2026 for the 2025-26 tax year. HMRC introduced a dedicated crypto section in 2024, making it easier to report disposals, but you still need to provide:
● Total number of disposals.
● Total gain or loss.
● Disposal values and cost basis for each transaction.
If your total disposals are under £50,270 (the basic rate band threshold) and your gains are below the £3,000 allowance, you might not need to file a full return—just report via the HMRC Real Time Capital Gains Tax Service.
What About Crypto Losses?
Now, here’s a silver lining: if your disposals result in a loss, you can use it to reduce your taxable gains. For example, if Meera, a London-based nurse, makes a £5,000 gain on Bitcoin but a £2,000 loss on Ethereum, her net gain is £3,000, which is covered by the CGT allowance. You can also carry forward losses to future years, but you must report them to HMRC within four years of the tax year they occurred.
Table 4: Example of Offsetting Losses
What If You’re Dealing with DeFi or Staking?
Now, it shouldn’t be a surprise that DeFi (decentralised finance) and staking add complexity. Staking rewards are typically treated as income, taxed at your marginal Income Tax rate when received. If you later dispose of staked crypto, you calculate CGT using the GBP value of the reward as the cost basis. For DeFi, like providing liquidity to a pool, HMRC may treat liquidity pool tokens as new assets, with complex disposal calculations when you exit the pool. Always consult a tax professional for these scenarios, as HMRC’s guidance is still evolving.
UK Crypto Capital Gains Tax Calculator
Advanced Strategies to Minimise CGT on Cryptocurrency and Key Takeaways for 2025-26
Can You Use Your CGT Allowance Effectively?
Now, let’s talk about making the most of that £3,000 CGT allowance. For the 2025-26 tax year, every UK taxpayer gets this tax-free amount for capital gains across all assets, including crypto. If you’re strategic, you can dispose of crypto up to this limit each year without paying tax. For example, if your Bitcoin has doubled in value, selling just enough to realise a £3,000 gain (minus fees) keeps you tax-free. Timing is key—spreading disposals across tax years can maximise your allowance.
Take Ewan, a Cardiff-based IT consultant. He holds 2 ETH, bought for £2,000, now worth £5,000. By selling 1 ETH in April 2025 for £2,500 (a £1,500 gain) and the other in April 2026, he uses his £3,000 allowance each year, avoiding tax entirely. Compare that to selling both in one year, where the £3,000 gain would be taxable at 18% or 24% on the excess.
Can Transferring Crypto to a Spouse Save Tax?
So, the question is: can you cut your tax bill by involving your spouse or civil partner? Absolutely! HMRC allows tax-free transfers of assets between spouses or civil partners, as long as you’re living together. The receiving spouse takes on the original cost basis, and any gain is taxed when they dispose of the crypto, potentially at a lower rate if they’re in a lower tax band.
For instance, Saira, a higher-rate taxpayer in Glasgow, holds 0.5 BTC bought for £10,000, now worth £20,000. Transferring it to her husband, Imran, a basic-rate taxpayer, means no tax on the transfer. If Imran sells it, the £10,000 gain is taxed at 18% (£1,800) instead of Saira’s 24% (£2,400), saving £600. Just ensure you document the transfer for HMRC.
How Can You Offset Losses Strategically?
Be careful! Not using losses effectively is like leaving money on the table. If you’ve got crypto that’s dropped in value, selling it to realise a loss can offset gains from other disposals. You can even carry forward losses indefinitely, but you must report them to HMRC within four years. For example, if Nia, a Bristol entrepreneur, makes a £10,000 gain on Ethereum but a £4,000 loss on Solana, her taxable gain drops to £6,000, and the £3,000 allowance reduces it further to £3,000.
Table 5: Strategic Loss Offsetting Example
If Nia’s in the basic rate band, her CGT bill is £540 (18% of £3,000). Without the loss, she’d pay £1,260 (18% of £7,000 after the allowance).
What About Negligible Value Claims?
Now, consider this: what if your crypto is worthless? Some projects go bust, leaving tokens with no market value. HMRC allows a negligible value claim to crystallise a loss without selling, which you can offset against gains. You’ll need to prove the asset is worthless (e.g., the project shut down or the exchange delisted it) and submit the claim via your Self-Assessment return. For example, if Tariq holds 1,000 tokens of a failed project bought for £2,000, now worth £0, a negligible value claim gives him a £2,000 loss to offset other gains.
Check HMRC’s guidance on negligible value claims at www.gov.uk/capital-gains-tax/losses for details.
Can Timing Your Disposals Save Tax?
Now, it shouldn’t be a surprise that when you sell matters. If your taxable income is close to the £50,270 basic rate threshold, a large crypto gain could push you into the 24% CGT bracket. Spreading disposals over multiple years or selling when your income is lower (e.g., during a career break) can keep you in the 18% bracket. Also, watch out for market dips—selling during a dip might reduce your gain or even crystallise a loss to offset future gains.
How Do Businesses Handle Crypto CGT?
If you’re a business owner, things get a bit more complex. Sole traders or partnerships disposing of crypto held for business purposes may face CGT, but if the crypto is part of trading stock (e.g., a crypto exchange business), profits are taxed as trading income under Income Tax rules. For limited companies, crypto gains fall under Corporation Tax (19% for 2025-26, or 25% for profits over £250,000). For example, if Priya’s design agency holds Bitcoin as an investment and sells it for a £10,000 gain, it’s taxed at 19% (£1,900) rather than CGT rates. Always clarify with HMRC whether your crypto is an investment or trading stock.
What Tools Can Simplify Your Tax Calculations?
None of us wants to spend hours crunching numbers. Software like Koinly or CoinTracker can automate CGT calculations by importing your transaction history and applying HMRC’s pooling rules. These tools generate reports for your Self-Assessment, but double-check their outputs—errors in cost basis or GBP conversions can lead to HMRC queries. Keep manual records as a backup, including screenshots of exchange transactions and wallet addresses.
How Do You Stay Compliant with HMRC?
Be warned! HMRC’s crypto crackdown is real, with nudge letters sent in 2024 targeting unreported gains. File your Self-Assessment by 31 January 2027 for the 2025-26 tax year, and pay any CGT owed by the same deadline. If you’re unsure, a tax adviser can help, especially for complex cases like DeFi or staking. HMRC’s Cryptoassets Manual (www.gov.uk/hmrc-internal-manuals/cryptoassets-manual) is your best resource for staying compliant.
Key Takeaways for UK Taxpayers and Business Owners
Every crypto disposal (sale, trade, or spending) triggers CGT based on the gain in GBP value.
The CGT allowance for 2025-26 is £3,000, with rates of 18% (basic rate) or 24% (higher/additional rate).
Crypto income from staking or mining is taxed under Income Tax, not CGT.
Use Section 104 pooling to calculate your cost basis, factoring in Same Day and Bed and Breakfast rules.
Offset losses against gains to reduce your tax bill, and report losses to HMRC for future use.
Transferring crypto to a spouse or civil partner is tax-free and can lower your CGT rate.
Negligible value claims let you claim losses on worthless crypto without selling.
Businesses may face Corporation Tax on crypto gains, depending on whether it’s an investment or trading stock.
Keep detailed records of all transactions, as HMRC may request them during compliance checks.
Use software to simplify calculations, but verify outputs and file your Self-Assessment by 31 January 2027.
FAQs
Q1: What is the deadline for reporting cryptocurrency capital gains to HMRC?
A1: The deadline for reporting cryptocurrency capital gains through Self-Assessment for the 2025-26 tax year is 31 January 2027, with any tax owed due by the same date.
Q2: Can cryptocurrency losses be carried back to previous tax years?
A2: Cryptocurrency losses cannot be carried back to previous tax years; they can only be carried forward to offset future capital gains, provided they are reported to HMRC within four years.
Q3: Are airdropped cryptocurrencies subject to Capital Gains Tax?
A3: Airdropped cryptocurrencies are typically treated as income, taxed at the recipient’s Income Tax rate when received, with any subsequent disposal subject to Capital Gains Tax.
Q4: How does HMRC determine the market value of a cryptocurrency disposal?
A4: HMRC requires the market value in GBP at the time of disposal, typically based on the exchange rate from a reputable cryptocurrency exchange or price aggregator like CoinGecko.
Q5: Is transferring cryptocurrency to a hardware wallet a taxable event?
A5: Transferring cryptocurrency to a hardware wallet is not a taxable event, as it’s considered a transfer between wallets owned by the same person, but transaction fees paid in crypto may trigger CGT.
Q6: Can you deduct legal fees related to cryptocurrency disposals from your CGT?
A6: Legal fees directly related to acquiring or disposing of cryptocurrency, such as for resolving disputes over ownership, can be included as allowable costs in CGT calculations.
Q7: What happens if you fail to report cryptocurrency gains to HMRC?
A7: Failing to report cryptocurrency gains can result in penalties, interest on unpaid tax, and potential investigations, especially if HMRC issues a nudge letter suspecting non-compliance.
Q8: Are cryptocurrency donations to non-charitable organisations taxable?
A8: Donating cryptocurrency to non-charitable organisations is treated as a disposal, triggering CGT on any gain, unlike donations to registered charities, which may qualify for relief.
Q9: How does HMRC treat cryptocurrency received as a gift?
A9: Cryptocurrency received as a gift (except from a spouse or civil partner) is treated as an acquisition at market value, with CGT applying when the recipient disposes of it.
Q10: Can you use the CGT allowance for cryptocurrency gains in multiple tax years?
A10: The CGT allowance of £3,000 applies separately to each tax year, so spreading disposals across years can maximise tax-free gains.
Q11: Are gas fees paid in cryptocurrency deductible for CGT purposes?
A11: Gas fees paid in cryptocurrency are treated as a disposal, but the GBP value of the fee can be included as an allowable cost in the CGT calculation for the main disposal.
Q12: How does HMRC treat cryptocurrency held in a trust?
A12: Cryptocurrency held in a trust is subject to CGT when disposed of by the trustees, with gains taxed at 24% for discretionary trusts, subject to the trust’s annual exemption.
Q13: Can you claim CGT relief for cryptocurrency held in an ISA?
A13: Cryptocurrency cannot be held directly in an ISA, so no CGT relief applies, but some crypto-related investments, like certain ETFs, may qualify for ISA tax benefits.
Q14: What records are required for cryptocurrency transactions?
A14: Records should include transaction dates, amounts, GBP values, wallet addresses, and proof of acquisition costs, as HMRC may request these during a compliance check.
Q15: How are cryptocurrency forks taxed in the UK?
A15: A cryptocurrency fork creates a new asset with a cost basis of zero, and any gain on its disposal is subject to CGT, based on the market value at the time of sale or trade.
Q16: Can you offset cryptocurrency losses against other types of capital gains?
A16: Cryptocurrency losses can be offset against any capital gains, such as those from shares or property, reducing the total taxable gain within the same tax year.
Q17: Are crypto-to-fiat exchange fees deductible for CGT?
A17: Fees paid in fiat currency for exchanging cryptocurrency to GBP are deductible as allowable costs when calculating the gain or loss for CGT purposes.
Q18: How does HMRC treat cryptocurrency used in margin trading?
A18: Cryptocurrency used in margin trading is subject to CGT on each disposal, with gains calculated based on the market value at the time of the trade, including any leveraged amounts.
Q19: Can you appeal an HMRC penalty for incorrect crypto tax reporting?
A19: An HMRC penalty for incorrect crypto tax reporting can be appealed within 30 days, typically by providing evidence of reasonable care or correcting the error promptly.
Q20: Are cryptocurrency gains taxed differently for non-residents in the UK?
A20: Non-residents are generally not subject to UK CGT on cryptocurrency disposals unless the assets are used in a UK trade or meet specific temporary non-resident rules.
About The Author:
Adil Akhtar, ACMA, CGMA, CEO and Chief Accountant of Pro Tax Accountant, is an esteemed tax blog writer with over 10 years of expertise in navigating complex tax matters. For more than three years, his insightful blogs have empowered UK taxpayers with clear, actionable advice. Leading Advantax Accountants as well, Adil blends technical prowess with a passion for demystifying finance, cementing his reputation as a trusted authority in tax education.
Email: adilacma@icloud.com
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