Calculate UK tax on cryptocurrency gains and income for 2025/26. Covers capital gains tax on disposals (sales, swaps, spending crypto), income tax on staking and mining rewards, and shows how much tax you can save by using the annual CGT allowance.
How HMRC taxes cryptocurrency
HMRC treats cryptocurrency as a capital asset, not currency. Every time you sell, swap, spend, or gift crypto (to anyone other than a spouse), a disposal occurs and CGT applies. The gain is the disposal value minus the cost basis from your Section 104 pool (the pooled average cost of all your holdings of that token).
Staking, mining, and airdrops are treated differently — the tokens received are taxed as miscellaneous income at income tax rates when received, based on their GBP market value at that time. That value then becomes the cost basis when you later sell those tokens (so you don’t pay tax twice on the same value).
2025/26 CGT rates for crypto
Crypto CGT rates are 18% for basic-rate taxpayers and 24% for higher/additional-rate taxpayers. The annual CGT allowance is £3,000. Gains above this threshold are taxed at the applicable rate. Losses can be offset against gains in the same year or carried forward indefinitely.
Frequently asked questions
What is the Section 104 pool and how does it work?
The Section 104 pool is
HMRC’s method for calculating the cost basis of fungible assets like crypto. All purchases of the same token are pooled together and you track the total cost and total quantity. When you sell, you calculate the average cost per token (total pool cost ÷ total pool quantity) and multiply by tokens sold. This means you can’t choose which specific coins to sell to minimise tax — they’re all considered interchangeable. Crypto tax software like Koinly or CoinTracker automates this pooling.
What is “bed and HODL” for crypto?
Bed and HODL (a crypto adaptation of “bed and breakfasting”) is the practice of selling crypto to crystallise a gain up to the annual CGT allowance (£3,000), then immediately repurchasing. This “steps up” the cost basis so future gains are smaller. Unlike shares, the 30-day same-asset rule (the “bed and breakfast” rule) technically applies to crypto too — selling and buying back within 30 days uses the repurchase cost as the cost basis rather than the pool, reducing the benefit. To truly step up the basis, wait 31 days or swap to an equivalent asset.
Do I need to report crypto if I made a loss?
You don’t have to report losses, but it’s strongly advisable to do so. Reporting losses to HMRC allows them to be carried forward indefinitely and offset against future gains, reducing future CGT bills. Losses are claimed via the capital gains pages of your Self Assessment return. You have up to four years after the end of the tax year to report a loss. Unreported losses cannot be carried forward.