UK Crypto Trading Tax Guide 2025

What is Crypto Trading?

Crypto trading involves buying, selling, or exchanging cryptocurrencies. HMRC treats cryptocurrency as property (assets), meaning most trading activities trigger Capital Gains Tax. Common trading activities include:

• Spot trading: Buying and selling crypto on exchanges (Coinbase, Kraken, Binance)
• Crypto-to-crypto swaps: Trading BTC for ETH, ETH for SOL, etc.
• Day trading: Multiple trades within the same day
• Swing trading: Holding positions for days or weeks
• Long-term investing: Buy and hold strategies
• DeFi trading: Swaps on Uniswap, SushiSwap, Curve

HMRC Treatment of Crypto Trading

HMRC treats most cryptocurrency transactions as Capital Gains Tax (CGT) events, not income. This applies to personal investors and traders. Only in exceptional cases (professional trading businesses) would income tax apply.

HMRC Guidance: CRYPTO20000+

HMRC's Cryptoassets Manual (CRYPTO20000+) provides detailed guidance:

"Individuals holding cryptoassets as a personal investment will be liable to pay Capital Gains Tax when they dispose of their cryptoassets."

What Qualifies as a Disposal?

The following activities trigger CGT:

• Selling crypto for GBP/fiat - BTC → GBP
• Trading crypto for crypto - BTC → ETH, ETH → SOL
• Using crypto to buy goods/services - Pay with Bitcoin
• Gifting crypto (other than to spouse/civil partner)
• Exchanging crypto for stablecoins - ETH → USDT (yes, taxable!)

Non-Taxable Events

• Buying crypto with GBP (no CGT until you sell)
• Transferring crypto between your own wallets
• Gifting to spouse or civil partner (no CGT at time of gift)
• Donating crypto to registered charity

Capital Gains Tax Rates (2024/25)

CGT on cryptocurrency depends on your total taxable income:

CGT Annual Exemption

The first £3,000 of capital gains each tax year is tax-free (reduced from £6,000 in 2023/24):

• 2024/25 tax year: £3,000 CGT allowance
• 2023/24 tax year: £6,000 CGT allowance
• 2022/23 tax year: £12,300 CGT allowance

How CGT Rate is Determined

Your CGT rate depends on your total taxable income plus capital gains:

Example:

• Salary: £40,000
• Crypto gains: £15,000
• Total: £55,000

CGT calculation:

• £10,270 of gains taxed at 10% (within basic rate band) = £1,027
• £4,730 of gains taxed at 20% (in higher rate band) = £946
• Total CGT: £1,973

Section 104 Pooling (Share Pooling)

Unlike the US (FIFO, LIFO), the UK uses Section 104 pooling - an average cost method for calculating cost basis.

How Section 104 Pooling Works

All purchases of the same cryptocurrency are pooled together. The cost basis is the average cost of all tokens in the pool.

Example: Basic Pooling

Purchases:

• Jan 2024: Buy 1 BTC for £30,000
• Jun 2024: Buy 2 BTC for £50,000 each (£100,000 total)

Section 104 pool:

• Total: 3 BTC
• Total cost: £30,000 + £100,000 = £130,000
• Average cost per BTC: £130,000 ÷ 3 = £43,333.33

Sale: Dec 2024, sell 1 BTC for £55,000

• Proceeds: £55,000
• Cost basis: £43,333.33
• Gain: £55,000 - £43,333.33 = £11,666.67

Remaining pool: 2 BTC with cost basis of £86,666.67 (£43,333.33 × 2)

Same-Day and 30-Day Rules

Before using Section 104 pooling, HMRC requires you to match disposals with acquisitions in this order:

1. Same-Day Rule

Crypto acquired and disposed of on the same day are matched first.

Example:

• March 1, 09:00: Buy 1 ETH for £2,000
• March 1, 15:00: Sell 1 ETH for £2,100

Result: These are matched (same-day), gain = £100

2. 30-Day Rule (Bed and Breakfasting)

Crypto acquired within 30 days after a disposal are matched next. This prevents "bed and breakfasting" (selling for a loss then immediately rebuying).

Example:

• April 1: Sell 2 ETH for £4,000 (from Section 104 pool)
• April 15: Buy 1 ETH for £1,800

Result: 1 ETH from the April 1 disposal is matched with the April 15 purchase (£1,800 cost basis). The remaining 1 ETH sold uses Section 104 pool cost.

3. Section 104 Pool

After same-day and 30-day matching, any remaining disposal uses the Section 104 pooled cost basis.

Crypto-to-Crypto Trades

Trading one cryptocurrency for another is a disposal and triggers CGT.

Example: BTC to ETH Trade

You bought 0.5 BTC for £15,000 in January 2024. In August 2025, when BTC is worth £60,000, you trade 0.5 BTC for 10 ETH.

Tax treatment:

• Disposal value = 0.5 BTC × £60,000 = £30,000
• Cost basis = £15,000 (from Section 104 pool)
• Capital gain = £30,000 - £15,000 = £15,000

Your new Section 104 pool for ETH adds 10 ETH at £30,000 cost (£3,000 per ETH).

Stablecoin Trades

Trading crypto for stablecoins (USDT, USDC, DAI) is also a disposal:

• ETH → USDT = CGT disposal of ETH
• USDT → BTC = CGT disposal of USDT (usually minimal gain/loss if USDT = $1)

DeFi Trading and Swaps

Decentralized exchange (DEX) swaps are treated the same as centralized exchange trades:

• Uniswap swap: ETH → USDC = CGT disposal
• Curve swap: USDC → DAI = CGT disposal
• Providing liquidity: Depositing ETH/USDC for LP tokens = disposal of ETH and USDC
• Removing liquidity: Burning LP tokens = disposal of LP tokens

How to Report Crypto Trading on Your Tax Return

When You Must Report

You must complete a Self Assessment tax return if:

• Total capital gains (before deducting allowance) exceed £3,000
• Total disposal proceeds exceed £50,000 (even if gains under £3,000)
• You're already in Self Assessment for other reasons

Self Assessment Tax Return

Report crypto gains on SA100 (main return) and SA108 (Capital Gains summary pages):

SA108 Section 1: Listed Shares and Securities

Despite the name, report crypto disposals here:

• Number of disposals: Total number of crypto trades
• Disposal proceeds: Total GBP value of all crypto sold
• Allowable costs: Total cost basis + fees
• Gains: Total gains
• Losses: Total losses

Real-Time Capital Gains Tax Service

If you make large gains and want to report/pay CGT before the Self Assessment deadline, you can use HMRC's Real-Time Capital Gains Tax service within 60 days of disposal.

Example Trading Scenarios

Scenario 1: Simple Purchase and Sale

Activity:

• Feb 2024: Buy 5 ETH for £10,000 (£2,000 per ETH)
• Nov 2024: Sell 5 ETH for £15,000 (£3,000 per ETH)

Calculation:

• Proceeds: £15,000
• Cost basis: £10,000
• Gain: £5,000
• Less CGT allowance: £3,000
• Taxable gain: £2,000

Tax owed: £2,000 × 10% = £200 (assuming basic rate taxpayer)

Scenario 2: Multiple Purchases (Section 104 Pooling)

Purchases:

Average cost: £175,000 ÷ 4 = £43,750 per BTC

Sale: Dec 2024, sell 2 BTC for £55,000 each (£110,000 total)

• Proceeds: £110,000
• Cost basis: 2 × £43,750 = £87,500
• Gain: £22,500
• Less allowance: £3,000
• Taxable gain: £19,500

Tax owed: £19,500 × 20% = £3,900 (assuming higher rate taxpayer)

Scenario 3: 30-Day Rule Application

Activity:

• March 1: Sell 10 ETH for £25,000 (attempting tax loss harvesting)
• March 20: Buy 5 ETH for £11,000

Result:

• 5 ETH from March 1 sale are matched with March 20 purchase (30-day rule)
• Remaining 5 ETH use Section 104 pool cost

This prevents you from crystallizing a loss while maintaining your position.

Scenario 4: Day Trading with Same-Day Rule

Activity on May 15:

• 09:00: Buy 1 ETH for £2,000
• 14:00: Sell 1 ETH for £2,150
• 16:00: Buy 1 ETH for £2,100

Same-day matching:

• 09:00 purchase (£2,000) matched with 14:00 sale (£2,150)
• Gain: £150

The 16:00 purchase enters the Section 104 pool for future disposals.

Capital Losses

Capital losses from crypto can offset capital gains:

Using Losses

• Same tax year: Offset losses against gains automatically
• Carry forward: Unused losses carry forward indefinitely to offset future gains
• Cannot offset income: Crypto losses can only offset capital gains, not employment income

Claiming Negligible Value

If crypto becomes worthless (e.g., rug pull, exchange collapse), you can claim a negligible value loss without disposing:

• Write to HMRC explaining the situation
• Claim the loss in current or prior tax year
• Requires evidence (e.g., exchange bankruptcy, token delisted everywhere)

Record Keeping Requirements

HMRC requires detailed records for at least 5 years after the 31 January submission deadline.

What to Track

• Type of crypto (BTC, ETH, etc.)
• Date and time of each transaction
• Amount in crypto and GBP value
• Exchange rate used (use consistent source like CoinGecko)
• Transaction type (buy, sell, trade, swap)
• Counterparty (exchange name, DEX protocol)
• Wallet addresses (for on-chain trades)
• Fees paid (add to cost basis)
• Section 104 pool calculations

How to Track

1. Crypto tax software: Koinly (UK-based, excellent Section 104 support), CoinTracker, CryptoTaxCalculator
2. HMRC template: Download HMRC's crypto tracking spreadsheet
3. Custom spreadsheet: Track purchases, Section 104 pools, disposals

Common Mistakes to Avoid

1. Using FIFO instead of Section 104: UK requires pooling, not first-in-first-out
2. Forgetting same-day and 30-day rules: These override Section 104 pooling
3. Not reporting crypto-to-crypto trades: All crypto swaps are CGT disposals
4. Ignoring small trades: Even £10 trades must be tracked for Section 104 pools
5. Not tracking stablecoin disposals: USDT/USDC trades are technically disposals (though usually minimal gain/loss)
6. Missing DeFi transactions: DEX swaps, liquidity provision are taxable
7. Not claiming losses: Offset losses against gains and carry forward unused losses
8. Poor record keeping: HMRC can request detailed records; missing data can result in penalties

Income Tax vs Capital Gains Tax

Most individuals pay CGT on crypto trading. However, you may owe income tax if:

When Crypto Trading is Income

• Professional trader: Trading is your main source of income, organized as a business
• Degree of activity: Very frequent trading (100s per day) conducted in a business-like manner
• Buying to resell: Acquiring crypto primarily for short-term resale (not investment)

Income tax rates (20%, 40%, 45%) are higher than CGT rates (10%, 20%), so HMRC rarely classifies personal trading as income.

FAQs

Do I pay tax on crypto-to-crypto trades?

Yes. Every crypto-to-crypto trade is a disposal of the first crypto and triggers CGT. Calculate the gain/loss in GBP terms at the time of trade.

Can I use FIFO or LIFO in the UK?

No. The UK requires Section 104 pooling (average cost method) after applying same-day and 30-day matching rules. FIFO and LIFO are US methods.

What if I don't have transaction records?

Request data from:

• Exchanges: Download complete transaction history (most keep 7+ years)
• Blockchain: Use Etherscan, Blockchain.com for on-chain transactions
• Tax software: Koinly can import historical data via API

If records are truly lost, HMRC may accept a reasonable estimate based on available evidence, but this risks challenges.

Can I offset crypto losses against my salary?

No. Capital losses can only offset capital gains, not employment or self-employment income. Unused losses carry forward to future tax years.

Do I need to report if my gains are under £3,000?

Only if your total disposal proceeds exceed £50,000. Otherwise, no Self Assessment required (unless you're already in Self Assessment for other reasons).

What about gifts to family members?

Gifting crypto (except to spouse/civil partner) is a disposal at market value:

• To spouse: No CGT at time of gift (no gain/no loss transfer)
• To others: Disposal at market value, you owe CGT on any gain
• Recipient: Their cost basis = market value at gift date

Can I use the 30-day rule to delay gains?

No, the 30-day rule works against you for tax planning. It's an anti-avoidance rule that prevents "bed and breakfasting" (selling for a loss then immediately rebuying). If you sell and rebuy within 30 days, the new purchase cost is matched with the disposal, limiting your ability to crystallize losses.

Tools and Resources

Crypto Tax Software

• Koinly - Best for UK, excellent Section 104 pooling, HMRC-compliant reports
• CoinTracker - Good portfolio tracking with UK tax support
• CryptoTaxCalculator - Strong UK features, handles same-day/30-day rules
• Recap - UK-focused with accountant integration

HMRC Resources

• HMRC Cryptoassets Manual
• Capital Gains Tax Overview
• Self Assessment Tax Returns

Final Thoughts

UK crypto trading taxes are complex due to Section 104 pooling and the same-day/30-day matching rules. The key principles are:

• Every disposal triggers CGT (crypto → GBP, crypto → crypto)
• Use Section 104 pooling for cost basis (after same-day and 30-day matching)
• Annual £3,000 CGT allowance shields small gains
• CGT rates of 10% or 20% based on your income
• Report via Self Assessment if gains exceed £3,000 or proceeds exceed £50,000

The 30-day rule makes tax loss harvesting more difficult than in countries without this rule (e.g., the US). Plan disposals carefully, and maintain detailed records of all transactions for at least 5 years.

Consider using UK-focused crypto tax software like Koinly to automate Section 104 calculations and generate HMRC-compliant reports.