Crypto Regulation in the UK: Complete Guide on Crypto Tax
Cryptoassets are used to denote a wide range of digital tokens in the UK that can be electronically transferred, stored, or traded. They relate to major coins and exchange tokens such as Bitcoin, Ethereum, and altcoins, which are considered property for tax purposes.
Stablecoins and payment tokens (also known as payment application tokens), such as USDT or USDC, are also cryptoassets used for making transactions or storing value.
NFTs or digital collectibles, which are unique tokens that represent digital art, gaming items, or titles for ownership, are also included. The disposal of the cryptoassets triggers capital gains tax.
HMRC, which is responsible for handling individual taxpayers’ affairs, treats DeFi tokens, governance tokens, utility tokens, and staking rewards as cryptoassets. Any income earned from staking, lending, liquidity providers, or rewards is generally taxable as income tax or capital gains tax. Essentially, if any token has economic value and can be traded or sold, it is classified under HMRC’s definition of a cryptoasset. From a tax perspective, cryptoassets are considered shares and are therefore taxed accordingly.
Regulatory Bodies Governing Crypto in the UK
HM Revenue & Customs (HMRC)
The HMRC may not be a financial regulator, but it contributes to tax transparency beyond crypto. In May 2025, HMRC regulations announced their plan to put forward the Crypto-Asset Reporting Framework (CARF), under which every crypto asset service provider, like cryptocurrency exchanges, custodians, wallet providers, and brokers, must accumulate detailed information of their customers as well as crypto transactions.
From January 2026, UK crypto exchanges will be required to report user and transaction data to HMRC under CARF, coincides with changes to crypto filing in the USA under new IRS reporting rules and reforms introduced through the GENIUS Act for stablecoins. This will enhance the visibility of holding crypto, help with tax compliance, and trace illicit transactions with foreign authorities.
Financial Conduct Authority (FCA)
The FCA serves as a primary regulator for the UK crypto market and also for the broader financial market. In May 2025, the FCA issued the Discussion Paper DP25/1 that outlines how the new statutory framework will be implemented.
Trading platforms, custodians, brokers, lending protocols, and crypto intermediaries will require FCA authorisation and comply with the regulations and tax obligations. It uses a consultative approach under the Financial Services and Markets Act 2000, which encourages further innovation and input, but also indicates that regulatory clarity may not align with market developments.
Bank of England
The BoE focuses on the systemic implications of crypto assets, including financial stability. It primarily focuses on stablecoins that operate like digital money within the payment system. The BoE published a paper in July 2023 on the regulatory approach for systemic payment systems using stablecoins. It proposed the criteria for spotting systemic stablecoin networks, including those having large-scale retail payment networks.
However, the BoE regulations may remain inactive till crypto adoption increases significantly. Nevertheless, it still determines the preparedness of financial institutions to act with regard to crypto transactions if necessary.
Treasury & Parliament
The Treasury published a detailed proposal in October 2023 for the development of a regulatory regime for financial services, including crypto assets and stablecoins. It aims to create new regulatory activities for cryptocurrency, including the operation of platforms on which an investor actively buys and sells crypto assets. However, these platforms need to be authorised and supervised by the Financial Conduct Authority.
For stablecoins, the proposal aimed to create new regulations regarding issuing Fiat-based stablecoins in the UK and to accept payments using stablecoins within the regulatory landscape, amending the Payment Services Regulations 2017 (PSRs 2017).
UK Legislation & Policy Framework for Crypto
The UK legislation and policy on crypto focuses on consumer protection, crime prevention, and financial stability.
- Crypto exchanges and trading platforms need to register with the Financial Conduct Authority (FCA) for anti-money laundering (AML) regulation.
- The Financial Services and Markets Act (FSMA) 2023 brings certain crypto investments under the regime of regulated financial promotions.
- Stablecoins that are particularly used for payments or transactions are to be included in HM Government’s broad framework for digital assets and are stipulated to be regulated.
- The Bank of England will manage systemic risk, while HM Treasury will be responsible for long-term policy.
- The income tax authority, HMRC, considers crypto assets to be property for capital gains tax and income tax.
How Crypto Is Taxed in the UK
Capital Gains Tax (CGT) on disposals
Capital gains tax is imposed on income generated from the sale or disposal of a financial instrument from any asset class that has gained market value, including cryptocurrencies. A capital gains tax is calculated only on the gains and not the amount that crypto investors receive in total. The rate of capital gains tax depends on the taxable gain and the type of asset that has been disposed of. The crypto tax in UK is charged on crypto gains for higher rate taxpayers (those earning over £50,270 for the tax year 2023-24 is 20%. Note that if any investor makes a loss, it can be used to reduce the overall tax bill.
| Tax Bracket | Income Range | CGT Rate |
| Basic Rate | £12,571 – £50,270 | 10% |
| Higher Rate | £50,271 – £125,139 | 20% |
| Additional Rate | Over £125,140 | 20% |
In the UK, every investor is entitled to an Annual Exempt Amount, which is a tax-free amount. The amount has been reduced from £6000 in 2023-24 to £3000 in 2024-25. The amount can be deducted from the gains, allowing investors to realise gains up to this limit without incurring capital gains tax. If an investor receives tokens from liquidity pool investments, then they are subject to capital gains tax according to HMRC.
Income Tax on crypto received (mining, staking, salary, airdrops)
In the UK, crypto income obtained through mining, staking, airdrops, payments for services, or rewards is treated as taxable income, subject to Income Tax and National Insurance contributions. This is because HM Revenue and Customs treats crypto income as a taxable event.
The income tax rates in the UK depend on the level of income and the residency tax status of the individual. It is also important to note that income from crypto sales is subject to income tax.
There are three main bands for Income Tax in UK – Basic, Higher, and Additional –
| Tax Bracket | Income Range | Income Tax Rate |
| Personal Allowance / Annual Tax-Free Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,139 | 40% |
| Additional Rate | Over £125,140 | 45% |
VAT on goods and services paid with crypto
Exchanging cryptocurrency for any Fiat currency is exempt from VAT based on the UK VAT legislation and the CJEU Hedqvist ruling. However, it must be noted that while using crypto to pay for goods and services, VAT applies only to the goods and services, and not to the cryptocurrency. The standard VAT rate is 20%.
Inheritance Tax implications for cryptoassets
Crypto holdings in the UK are subject to Inheritance Tax if the total value of the estate exceeds £325,000. The market value on the date of death is used to calculate the value of the crypto. Exemptions and reliefs, like leaving assets to charity or a spouse, can reduce the tax amount owed. Executives need to pay tax within six months of the death, and the standard Inheritance Tax rate is 40%, which can be reduced to 36% if a minimum of 10% is donated to charity.
Reporting & Filing Crypto Tax in UK
When and how to file a self-assessment tax return
Every UK resident must file a self-assessment tax return online by January 31 or on paper by October 31 after the end of the crypto tax year. The self-assessment tax return process also requires individuals to register with HMRC so that they can give a Unique Taxpayer Reference (UTR) and fill in financial details on online systems
HMRC’s online CGT service
You can report your crypto gains through the HMRC real-time CGT online service, regardless of whether you file self-assessment. Log in with your government gateway, provide details of your disposal, submit your calculations of the gains made, and HMRC regulations will provide a payment reference. These details must be reported by December 31 after the end of the tax year and filed by January 31.
Also read: Crypto Regulation in India
Record-keeping requirements
HMRC has established strict requirements for keeping detailed records of all cryptocurrency transactions, including the tokens date, type, and amount of each asset, the GBP value at the time of the transaction, wallet addresses, and the marketplace or platform the asset was acquired or exchanged on. The GBP value of tokens awarded at the receipt time is taxable as miscellaneous. income with reasonable expenses, reducing the chargeable amount. Individuals need to keep the records for a minimum of 5 years after the filing deadline of January 31.
International exchanges and offshore reporting rules
Taxpayers in the UK need to report any cryptocurrencies that they hold or trade on international or offshore exchanges because HMRC taxes gains worldwide. As of January 1, 2026, international cryptocurrency exchanges will legally have to report to HMRC the name, date of birth, address, and National Insurance number of the users while providing their full transactional data as required under the OECD’s Crypto Asset Reporting Framework (CARF). Note that double taxation relief may apply here if the individual has paid tax abroad.
Crypto Tax Tools & Calculators for UK Investors
Tax-reporting tools have become a necessity for cryptocurrency investments in the UK to track, calculate, and report gains in compliance with HMRC. These tools automate the process of importing transactional data from exchanges, wallets, and blockchains, and then apply HMRC‘s cost-basis rules, which include the share pooling and the same-day or 30-day bed-and-breakfasting rules. This functionality is ideal for every crypto trader in the UK to reduce manual recording via a spreadsheet and have a calculation that complies with UK law.
Koinly, CoinTracker, Accointing, CoinLedger, and Recap are some of the top options that have the UK’s tax-reporting feature. They not only have API syncing capabilities, but also allow CSV uploads from popular exchanges, including Binance, Coinbase, and Kraken, allowing international DEX and DeFi projects too. They report and calculate capital gains, losses, income from staking, mining, or from NFTs. Note that simply buying an asset or NFT doesn’t incur any immediate tax liability. A majority of them also offer ready-to-file SA108 Capital Gains Summary reporting forms, income reports, and logs for tax reporting purposes that are acceptable documentation by HMRC.
Timeline of Crypto Regulation in the UK
Here’s a brief timeline of crypto regulations in the UK –
- 2020: AML regulations came into effect for cryptocurrency exchanges and custodians.
- 2023: FCA enforces fines for violations of new financial promotional rules regarding crypto adverts.
- 2024: FCA publishes Crypto Roadmap, outlining areas of regulations regarding stablecoins, custody of crypto trading, and staking.
- April 2025: HM Treasury publishes draft legislation to regulate crypto services under the FSMA.
- 2025: FCA launches consultations regarding stablecoins, custody, conduct, market abuse, and platform governance.
- 2026: Full UK crypto regulatory framework expected to launch.
Conclusion
Crypto regulation in the UK has recently developed to manage risks arising from fraudulent transactions, money laundering, and the protection of investors while also allowing innovation. The HMRC treats cryptoassets as either property or income for taxation purposes, and the FCA has started to enforce regulations related to advertising, custody, and conduct rules. Legislation is imminent under the FSMA and the OECD’s CARF. This will require an extension of transparency requirements, including reporting transactions and user identity. We can expect to see a more holistic regulation framework with new rules by 2026, covering exchanges, stablecoins, NFTs, DeFi, and staking in the UK.
Frequently Asked Questions
Do I have to pay tax on crypto transactions or sales?
Yes, you generally need to pay capital gains tax on crypto transactions that create short-term profit in the UK. Additionally, you may also have to pay Income Tax if you are selling and receiving cryptocurrency income from the sale.
Are NFTs taxed differently in the UK?
No, NFTs are not taxed under a separate tax regime in the UK. Instead, HMRC treats NFTs similarly to any other capital assets, applying the same capital gains tax and income tax rules, depending on the nature of the transaction.
How much tax to pay on overseas exchanges like Binance or Coinbase?
In the UK, you must pay Income Tax on cryptocurrencies held on any overseas exchanges like Binance or Coinbase. You may also have to pay Capital Gains Tax.
