Crypto Tax UK 2025: HMRC Guidance for Businesses and Investors

The UK cryptocurrency tax landscape has transformed dramatically in 2025, with HMRC implementing stricter reporting requirements and enhanced enforcement measures. Whether you’re a business accepting digital payments or an individual investor trading Bitcoin and Ethereum, understanding your tax obligations has never been more critical.

This comprehensive guide covers everything UK taxpayers need to know about crypto tax in 2025, from the reduced Capital Gains Tax allowance to new reporting requirements taking effect in 2026.

HMRC’s Position on Cryptocurrency Taxation

HMRC treats cryptocurrency as property rather than currency, meaning most crypto transactions fall under existing tax frameworks. HMRC guidance is clear that profits from crypto may be subject to Capital Gains Tax or Income Tax, depending on the specific transaction.

The key principle governing crypto taxation is that the tax treatment depends on the nature of the transaction, not the technology used. Rather than creating a dedicated crypto tax regime, HMRC applies existing tax laws and interprets them based on the nature of each transaction.

Capital Gains Tax on Crypto Disposals 2025

Reduced CGT Allowance Impact

The most significant change affecting UK crypto investors in 2025 is the dramatically reduced Capital Gains Tax allowance. For the 2025/26 tax year, HMRC will offer each taxpayer a £3,000 Capital Gains Tax free allowance, so you’ll only pay tax on capital gains over this amount. This represents a substantial decrease from previous years when the allowance was £12,300.

What Constitutes a Taxable Disposal

If you sell crypto for fiat, swap it for another token, spend it on goods or services, or gift it to someone other than your spouse, HMRC considers it a disposal. The gain calculation involves the difference between your acquisition cost (including fees) and the disposal value in GBP.

Common taxable events include:

Selling cryptocurrency for fiat currency
Trading one cryptocurrency for another
Using crypto to purchase goods or services
Gifting crypto to non-spouse recipients

CGT Rates for 2025

The tax rate for CGT depends on your income tax bracket: 18% if you’re within the Basic Rate income band (up to £50,270), 24% if you’re within the Higher Rate (up to £150,000) or Additional Rate income band (over £150,000).

For transactions occurring after 30 October 2024, different rates may apply, and HMRC requires specific reporting in Box 51 of the Self Assessment to split gains before and after this date.

Income Tax on Crypto Earnings

When Income Tax Applies

Some transactions generate income rather than capital gains. This includes rewards from staking, mining, airdrops linked to an action, or any crypto received as payment for a job or service.

In these cases, the value of the crypto at the time you receive it is added to your other income and taxed at your marginal rate (20%, 40%, or 45% in 2025).

Income tax applies to:

Getting paid in crypto – which may also be subject to National Insurance
Mining rewards
Staking rewards
Referral bonuses
Airdrops – in some instances

Personal Allowance Considerations

Tax-free allowances include a 3,000£ CGT exemption for 2024/2025 (down from 6,000£) and a 12,570£ personal allowance for Income Tax. Any crypto income above the personal allowance threshold becomes subject to Income Tax at your marginal rate.

DeFi and Staking Tax Implications

Current HMRC Guidance on DeFi

The taxation of Decentralised Finance activities represents one of the most complex areas of crypto taxation. Under HMRC’s current guidance (CRYPTO60000+), a DeFi transaction can be treated as a disposal if it involves a change in beneficial ownership. This can include sending tokens into a smart contract or liquidity pool, even where you expect to receive back the same type and quantity of tokens later.

Staking and Lending Tax Treatment

For the lender, when you loan out crypto – you make a disposal which is subject to Capital Gains Tax. If you know the amount of crypto you’re receiving in return for the loan – you should include this in your capital gains calculations.

Important: Even actions like swapping tokens or moving them between DeFi protocols can count as a taxable disposal under HMRC rules. Many crypto investors overlook this and end up with unexpected tax bills.

Proposed Changes Under Review

HMRC also suggested treating all DeFi returns as income, to remove the current ambiguity between income and capital. Important: these proposals are not part of UK law. As of 2025, HMRC’s current guidance continues to apply.

New Reporting Requirements from 2026

CARF Implementation

A major development affecting UK crypto holders is the implementation of the OECD’s Crypto Asset Reporting Framework (CARF). At the Autumn Budget 2024, the government confirmed that it would implement the cryptoasset reporting framework (CARF) in the UK.

Data Collection Requirements

From January 2026, UK residents who own cryptoassets such as Bitcoin, Ethereum, or Dogecoin must provide personal identification details to each crypto service provider they use. This includes:

Full name and date of birth
Current address
National Insurance number or Unique Taxpayer Reference
Tax residence information

Penalties for Non-Compliance

A penalty of up to £300 may be charged where the person fails to provide the information or gives inaccurate information. These rules come with teeth. If a provider fails to report correctly, they could face fines of up to £300 per user.

Business Crypto Tax Considerations

Accepting Crypto Payments

Businesses accepting cryptocurrency payments must treat these transactions as taxable events. The value received must be converted to GBP at the time of the transaction for tax reporting purposes.

For businesses operating in the crypto space, different tax rules may apply. For those carrying on a trade in the UK, the outcome of the transactions will be reflected in their trading profits for tax purposes rather than subject to capital gains rules.

Employee Crypto Payments

If your business accepts crypto or rewards employees in digital currency, HMRC expects these activities to be declared accordingly. Crypto payments to employees are subject to Income Tax and National Insurance contributions.

Record Keeping and Compliance

Essential Documentation

HMRC expects comprehensive record-keeping for all crypto transactions. HMRC generally expects you to keep detailed records of all transactions, including dates, market values in GBP, transaction fees, and what each transaction represents.

Required records include:

Transaction dates and times
Types and quantities of crypto assets
GBP values at transaction dates
Transaction fees and costs
Wallet addresses and exchange details
Business purpose (if applicable)

Cost Basis Calculations

In cryptocurrency trading, HMRC mandates using specific cost basis methods for calculating capital gains and losses to prevent manipulation:

Same-Day Rule: Transactions on the same day are matched first
Bed and Breakfasting Rule: Sales and repurchases within 30 days
Section 104 Rule: Average cost basis calculation for remaining disposals

Self Assessment Reporting Changes

New Crypto-Specific Sections

The income tax self assessment tax return for 2024/25 includes new boxes for reporting cryptoasset gains and losses. For the 2024–2025 tax year, HMRC has introduced dedicated sections in the capital gains section.

Reporting Deadlines

HMRC deadlines for filing tax returns and paying taxes, including on cryptocurrency gains, are: Paper returns: Due by 31st October after the tax year ends (e.g., for the tax year ending 5th April 2024, the deadline is 31st October 2024). Online returns: Due by 31st January after the tax year ends (e.g., for the tax year ending 5th April 2024, the deadline is 31st January 2025).

HMRC Enforcement and Investigations

Increased Scrutiny

Crypto investors are increasingly receiving “nudge” letters from HMRC, prompting them to disclose unreported gains. HMRC is getting savvier about crypto. They’re receiving more data from exchanges. Crypto exchanges report user transaction data to HMRC as part of the crypto asset reporting framework, increasing transparency and ensuring accurate reporting of crypto activities.

Voluntary Disclosure Opportunities

HMRC operates a specific crypto asset disclosure service for taxpayers who need to report previously undeclared crypto gains or income. Making a voluntary disclosure can reduce penalties and demonstrate good faith cooperation with HMRC.

Investigation Powers

HMRC can investigate 20 years back into a person or business’s tax activity. This is where it believes there has been deliberate evasion. Interest is usually due on any tax outstanding, as are penalties, which can be considerable.

Tax Planning Strategies

Loss Harvesting

If you have lost access to crypto due to a lost key, scam, or broken contract, and you want to claim a capital loss, you can submit a negligible value claim. This can be included in your tax return or sent separately to HMRC with evidence of the loss.

Spouse Transfers

Transfers between spouses or civil partners are generally exempt from Capital Gains Tax, providing opportunities for tax-efficient planning within families.

Timing Considerations

With the £3,000 allowance for 2025 being so much lower than in previous years, smart tax planning is essential. UK crypto investors can no longer afford to be casual about their tax strategy.

Professional Advice and Support

Given the complexity of crypto taxation and HMRC’s increased enforcement activity, professional advice is increasingly valuable. In this regard, professional accountants can help you review your records, calculate liabilities, and respond to any official queries with confidence.

Key areas where professional support adds value include:

Complex DeFi transaction analysis
Business crypto payment integration
HMRC investigation response
Tax-efficient disposal planning
International compliance coordination

Looking Ahead: Future Developments

The crypto tax landscape continues to evolve rapidly. We’re expecting clearer guidance on DeFi taxation in 2025. Areas like liquidity provision and yield farming currently sit in something of a grey area.

With HMRC’s enhanced data collection capabilities from 2026 onwards, compliance will become increasingly automated and scrutinised. Early preparation and comprehensive record-keeping are essential for all UK crypto participants.

Conclusion

The crypto tax environment in the UK has matured significantly, with HMRC implementing comprehensive frameworks for taxation and compliance. The reduced £3,000 Capital Gains Tax allowance, new reporting requirements, and enhanced enforcement measures mean that casual approaches to crypto tax compliance are no longer viable.

Whether you’re an individual investor, business owner, or professional service provider, understanding and complying with HMRC’s crypto tax requirements is essential for avoiding penalties and maintaining good standing with the tax authority.

CPD Information: Reading this article may contribute to your Continuing Professional Development (CPD) requirements. Please check with your professional body (ICAEW, ACCA, CIMA, etc.) for specific CPD recognition criteria.

Estimated Reading Time: 16 minutes

Sources and References:

HMRC Cryptoassets Manual – Official HMRC guidance
UK Crypto Tax Guide 2025 | Kraken – Current tax rates and allowances
Crypto Tax UK: Expert Guide 2025 | Koinly – Comprehensive tax guidance
HMRC DeFi Tax Rules in the UK (2025 Update) – DeFi taxation analysis
New HMRC guidance on cryptoasset reporting | ICAEW – Professional body guidance

Estimated Reading Time: 16 minutes

Disclaimer: This article provides general guidance based on current HMRC requirements as of September 2025. Individual circumstances may vary, and professional advice should be sought for specific situations.

Last Updated: September 2025