📝 Description
Discover the tax allowances and exemptions available in the UK tax system that can reduce or eliminate the tax owed on your cryptocurrency transactions. These allowances apply to all your investments, not only crypto.
💡 Good to know
Keep detailed records of your acquisition prices, transaction dates, wallet transfers, and reward values. Even when no tax is owed, HMRC may request proof of your transactions.
⚖ Capital Gains Tax allowance
The UK provides an Annual Exempt Amount (AEA) for capital gains.
Currently, the Annual Exempt Amount is £3,000 per tax year. This means the first £3,000 of your total gains in a tax year are tax-free.
Description | Amount |
Total crypto gains | £4,500 |
Annual allowance | £3,000 |
Taxable gain | £1,500 |
Only the £1,500 above the allowance is subject to Capital Gains Tax.
Do you still need to declare if gains are below £3,000?
You may still need to file a tax return if your total crypto disposals exceed four times the allowance (current threshold: £12,000 in total disposals).
Scenario | Required to declare? |
Gain £2,000, disposals £8,000 | No |
Gain £2,000, disposals £50,000 | Yes |
Even though the gain is tax-free, the volume of transactions requires reporting.
⚖ Income allowance
For smaller amounts of crypto income (such as staking rewards), the UK offers a Trading or Miscellaneous Income Allowance.
Currently, the allowance is £1,000 per year. If your total crypto income is below this threshold, it may be exempt from tax.
Crypto income | Tax due |
£600 staking rewards | £0 |
£900 airdrops | £0 |
£1,500 rewards | Taxable above £1,000 |