How is cryptocurrency taxed in the UK?
Answered 17 March 2026
How is Cryptocurrency Taxed in the UK?
What the law says
Cryptoasset tokens are intangible but count as a 'chargeable asset' for Capital Gains Tax purposes under the Taxation of Chargeable Gains Act 1992 (TCGA 1992), provided they are capable of being owned and have a realisable value.
Where DeFi lending/staking activity constitutes a trade, it is subject to Income Tax under Section 5 of ITTOIA 2005, and Income Tax takes priority over Capital Gains Tax. Where a DeFi return has the nature of income but no trade exists, it falls within the miscellaneous income sweep-up provisions (Part 5, ss.687–689 ITTOIA 2005).
HMRC guidance / practice
1. Capital Gains Tax (CGT) — the default position for individuals
In the vast majority of cases, individuals hold cryptoassets as a personal investment and will be liable to pay Capital Gains Tax when they dispose of their cryptoassets. HMRC expects buying and selling of tokens by an individual to normally amount to investment activity rather than a trade.
A 'disposal' is a broad concept and includes:
- Selling tokens for money
- Exchanging tokens for a different type of token
- Using tokens to pay for goods or services
- Giving away tokens to another person
Note: Moving tokens between wallets you beneficially own is not a disposal.
2. Income Tax — when it applies
Individuals are liable to pay Income Tax and National Insurance contributions on cryptoassets received from:
- Their employer as a form of non-cash payment
- Mining, transaction confirmation, or airdrops
Where an individual is carrying on a financial trade in cryptoassets, Income Tax rules take priority over CGT rules — though HMRC considers this likely to be unusual.
3. Mining
Whether mining amounts to a taxable trade depends on the facts, including degree of activity, organisation, risk, and commerciality. For example:
- Using a home computer with spare capacity → unlikely to be a trade
- Purchasing dedicated computers for expected net profit → probably a trade
If mining does not amount to a trade, the sterling value of cryptoassets received at the time of receipt is taxable as miscellaneous income. If the miner later disposes of the assets, CGT may also apply.
4. DeFi Lending & Staking
- If a trade is carried on: Income Tax applies under ITTOIA 2005
- If no trade: the transfer of tokens may constitute a CGT disposal, and any return received may be subject to Income Tax as miscellaneous income if it has the character of income
- HMRC does not consider the return from crypto lending to be "interest" for tax purposes, as cryptoassets are not regarded as currency or money
5. VAT
- Bitcoin mining is generally outside the scope of VAT (insufficient link between services and consideration)
- Transaction fees charged by miners are exempt from VAT (Item 1, Sch 9, Gp 5 VATA)
- When Bitcoin is exchanged for goods/services, no VAT is due on the Bitcoin itself, but VAT is due in the normal way on the goods/services received, valued at the sterling equivalent of the cryptocurrency at the point of the transaction
6. Record-keeping
The onus is on the individual to keep their own records for each cryptoasset transaction, as exchanges may not retain records for long. Records should include wallet activity, blockchain transaction references, and fiat conversion records.
Citation sources
If the return has the nature of income, then it will be within the scope of Income Tax. On the assumption that the transactions are not part of a trade carried on by the customer, the receipt will be within the scope of the miscellaneous income provisions (Part 5 ITTOIA 2005). Sections 687-689 ITTOIA 2005 (known as the “sweep-up provisions”) charge to Income Tax income from any source that is not otherwise charged under or as a result of any other provision of ITTOIA 2005 or any other act. For g
Cryptoassets can be awarded to ‘miners’ in return for verifying additions to the distributed ledger. Whether such activity amounts to a taxable trade (with the cryptoassets as trade receipts) will depend on the particular facts, taking into account a range of factors such as: degree of activity organisation risk commerciality For example, using a home computer while it has spare capacity to mine tokens would not normally amount to a trade. However, purchasing a bank of dedicated computers to min
If a trade is not carried on by an individual, or the activity which generates the return falls outside the scope of any trade, then the making of a DeFi loan/staking may give rise to a disposal of a chargeable asset (see CRYPTO61600). Where this is the case, Capital Gains Tax will apply to the disposal. However, in exchange for making a DeFi loan/staking, the lender/liquidity provider will sometimes receive a reward for providing those services. For example, a lender of tokens may charge the bo
Lending and borrowing of cryptoassets has been possible since the first cryptoasset, bitcoin, was produced in 2009. The pseudonymous nature of cryptoassets combined with a lack of regulation meant this was potentially a high risk activity for the lender as the borrower might deliberately default on the loan. Early lending and borrowing agreements tended to be restricted to parties that knew each other, such as a company and its shareholder(s). DeFi lending platforms facilitate lending between un
The VAT liabilities outlined below are provisional pending further developments; in particular, in respect of the regulatory and EU VAT positions. HMRC will not apply any changes retrospectively. For VAT purposes Bitcoin and similar cryptocurrencies are to be treated as follows: Bitcoin received by miners for their Bitcoin mining activities will generally be outside the scope of VAT on the basis that the activity does not constitute an economic activity for VAT purposes because there is an insuf
If an individual is considered to be carrying on a trade involving the making of DeFi loans/staking, then the activity that falls within the scope of that trade will be subject to Income Tax under Section 5 of the Income Tax (Trading and Other Income) Act 2005 (“ITTOIA 2005”). Income Tax will take priority over Capital Gains Tax and apply to the profits (or losses) of the trade. If there is a trade involving cryptoassets, those assets may potentially be held as either trading stock or as investm
Companies need to calculate their gain or loss when they dispose of their tokens to find out whether they need to pay Corporation Tax. A ‘disposal’ is a broad concept and includes: selling tokens for money exchanging tokens for a different type of token using tokens to pay for goods or services giving away tokens to another person If a company gives away exchange tokens to another company which is not a member of the same group (see CG45000 et seq), or to an individual or other entity, the compa
Cryptoasset exchanges may only keep records of transactions for a short period, or the exchange may no longer be in existence when an individual completes a tax return. The onus is therefore on the individual to keep their own records for each cryptoasset transaction. Records of cryptoassets can be: paper (cold) wallets containing the individual’s public and private keys electronic (hot) wallets on devices other records of their transactions and balances such as downloads of their wallet activit
Tokens are digital and therefore intangible, but count as a ‘chargeable asset’ for Capital Gains Tax if they’re both: capable of being owned have a value that can be realised For more information about what makes an ‘asset’ for Capital Gains Tax purposes, see CG12010. Customers looking for guidance on paying Capital Gains Tax when disposing of cryptoassets can refer to this guidance: https://www.gov.uk/guidance/check-if-you-need-to-pay-tax-when-you-sell-cryptoassets. HMRC expects that buying and
In the vast majority of cases, individuals hold cryptoassets as a personal investment, usually for capital appreciation or to make particular purchases. They will be liable to pay Capital Gains Tax when they dispose of their cryptoassets. Individuals will be liable to pay Income Tax and National Insurance contributions on cryptoassets which they receive from: their employer as a form of non-cash payment (see CRYPTO21100) mining, transaction confirmation or airdrops (see CRYPTO21150, CRYPTO21200