In 2026, significant changes to how UK resident crypto asset activity is monitored has been introduced. Like other financial institutions (such as banks, building societies), UK-based crypto asset service providers are required to report tax-relevant information directly to HMRC.
Whether you are a seasoned investor, or new to acquiring crypto assets, this article provides a practical catch-up on the key rules, recent changes, and what to consider when reporting crypto asset transactions.
Crypto assets (cryptocurrencies or ‘crypto’) are defined as a digital asset whose ownership is recorded on a secure ledger. They are an alternative way of storing value, with transfers and payments occurring through a peer-to-peer system, allowing electronic transactions which avoid an intermediary or bank.
Despite the use of these tokens as electronic ‘cash’, HMRC classifies these as property, rather than currency. As such, interactions with crypto will typically fall under two distinct tax regimes, Income Tax and Capital Gains Tax.
- Receiving crypto via airdrops or as a reward, as well as from mining the crypto, or stacking triggers may income tax. The value of the token is defined on the date it is received (or mined) and taxed at your marginal rate of income tax (20%, 40%, 45%).
Frequent and organised trading or mining may be considered a trade, which could have additional implications (i.e. the deductibility of expenses and National Insurance payable). - Disposal of crypto, on the other hand, triggers Capital Gains Tax (CGT). This can include selling crypto for traditional currency, swapping or spending crypto assets. Gains are taxable at 18% where they fall within the unused basic rate band and exceed the £3,000 annual CGT exemption, and at 24% on gains above that threshold. The calculation of gains must take account of HMRC’s specific cryptoasset matching rules, which are designed to prevent the artificial manipulation of capital gains and losses. Accurately applying these rules is essential, and professional advice may be required where transactions are complex.
Capital losses realised when a crypto asset is sold for less than it was bought for, can be deducted from any other capital gain realised in the same tax year to reduce the CGT payable. If a crypto asset becomes worthless, a Negligible Value Claim can be filed.
As such, it is more important than ever to make sure both gains and income derived from crypto assets are reported accurately.
Your questions answered
Can HMRC see your crypto transactions?
Yes, HMRC will receive information directly from crypto platforms. They will be able to cross-check your tax returns against reported data and identify any discrepancies or undeclared activity.
What records do I need to keep for crypto assets?
It is important to keep detailed and accurate records of all crypto transactions including purchases, sales, transfers and exchanges, as well as tracking gains and losses consistently. Consider seeking professional advice if these are complex, or you are using multiple platforms or wallets.
Do I pay tax if I haven’t converted my crypto into cash?
Yes. Even if you have not ‘cashed out’, you may still have a taxable disposal. Capital Gains Tax can be triggered by swapping, spending or gifting cryptocurrency, as well as selling it for traditional currency.
More information on how HMRC considers crypto assets can be found here: Cryptoassets Manual – HMRC internal manual – GOV.UK
