📝 Description
Understand the current tax regime for cryptocurrency investors in the United Kingdom. Discover the applicable Capital Gains Tax (CGT) rates, the Income Tax rates for passive gains, the £3,000 tax-free allowance, and your essential reporting obligations to the HMRC.
💡 Capital Gains Tax (CGT) and the £3,000 Allowance
When you dispose of a crypto asset (sell for fiat, swap for another crypto, pay for goods, or gift to someone other than a spouse), you trigger a taxable event.
Tax rates: The CGT rates are 10% or 20%, depending on your overall income tax band.
The £3,000 allowance: You only pay tax on your total net gains that exceed the annual tax-free allowance of £3,000.
⚠️ Important note: Unlike some other European thresholds, the UK allowance is a deduction. If your total net capital gains amount to £3,500 for the tax year, you will only be taxed on the £500 excess.
📤 Crypto Income Tax
Some crypto activities generate taxable income at the exact moment the tokens are received. This income is subject to standard Income Tax rates (ranging from 20% to 45%).
Applicable operations: This includes mining rewards, staking rewards, DeFi yields, and certain airdrops received in exchange for services.
Preventing double taxation: The GBP value declared as income upon receipt becomes your new acquisition cost basis for future CGT calculations when you eventually sell those tokens.
📂 HMRC Calculation Rules and Deductible Fees
To accurately calculate your taxable gains, the HMRC mandates a strict hierarchical matching system.
Same-day rule: Matches buys and sells of the exact same asset occurring on the same day.
30-day rule (Bed & Breakfast): Matches crypto sold and repurchased within 30 days to prevent tax harvesting.
Section 104 Pool: All remaining tokens are pooled together per asset, using an average cost basis.
Fees: Purchase and disposal exchange fees are deductible, but gas fees paid for transferring crypto between your own wallets are not deductible (as a transfer is not a disposal).
⚖️ Reporting Obligations and Waltio's Support
Even if your gains fall below the £3,000 allowance, you still have reporting obligations if the total proceeds from your disposals exceed the HMRC reporting threshold (generally four times the allowance).
Form SA108: Used to report your Capital Gains.
Form SA100: Used to report your Crypto Income.