Crypto Tax UK 2026 — CGT, Section 104 Pool, GBP 3,000

TL;DR

The United Kingdom taxes most personal crypto activity as Capital Gains Tax (CGT) at 10% for basic-rate taxpayers and 20% for higher and additional-rate taxpayers — note that the 24% residential-property rate does not apply to crypto. Each tax year you receive a GBP 3,000 CGT annual exempt amount (down from GBP 6,000 in 2023/24 and GBP 12,300 before that). HMRC requires the Section 104 pool averaging method for cost basis, plus the same-day rule and 30-day "bed and breakfast" rule. Crypto-to-crypto swaps are taxable disposals. Mining, staking, airdrops earned with consideration, and crypto employment income are taxed as income at 20/40/45%. Reporting is via SA100 Self Assessment, due online by 31 January 2027 for the 2025/26 year, or via the Real Time CGT service for occasional disposals.

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UK Crypto Tax Landscape in 2026

HMRC has been one of the most active tax authorities in the world on crypto, publishing its Cryptoassets Manual continuously since 2018. The 2026 position is mature: the UK does not treat crypto as currency or money. It is property — in HMRC language, a chargeable asset for CGT purposes when held by individuals as personal investments.

Two facts shape every UK crypto investor's planning. First, the CGT annual exempt amount was slashed from GBP 12,300 (2022/23) to GBP 6,000 (2023/24) to GBP 3,000 from 2024/25 onwards. That collapse means many more retail traders cross the reporting threshold each year. Second, HMRC now receives data directly from UK-registered exchanges and, from 2026 onwards, from foreign exchanges via the OECD's Crypto-Asset Reporting Framework (CARF) and DAC8. The "nudge letters" HMRC sent to ~10,000 crypto investors in 2024 are widely expected to scale across the entire taxpayer base.

The UK system is unusual because of its Section 104 pool cost-basis methodology, inherited from share matching rules. It is mathematically average-cost rather than FIFO, and combined with same-day and 30-day rules, it can confuse newcomers more than any other element of British investment taxation.

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Key Tax Rules

• CGT rates: 10% (basic-rate) or 20% (higher/additional-rate) on net gains above the annual exempt amount. The 24% residential-property rate does not apply.
• Annual exempt amount: GBP 3,000 for 2025/26 and 2026/27.
• Cost basis: Section 104 pool averaging, plus same-day and 30-day matching rules.
• Crypto-to-crypto swaps are taxable — exchanging BTC for ETH crystallizes a gain or loss.
• Mining, staking, airdrops, employment income in crypto: taxed as income at 20/40/45% plus National Insurance where applicable.
• Losses can be carried forward indefinitely once claimed within four years.
• No holding-period exemption — there is no "hold for X years and pay nothing" rule (unlike Germany or Portugal long-held).
• Inheritance tax applies to crypto at standard 40% above the nil-rate band.

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Tax Rates and Brackets 2025/26 and 2026/27

Capital gains are stacked on top of taxable income to determine which rate applies. Income tax bands (England/Wales/NI, frozen until 2028):

Scotland has different income tax bands but the same CGT bands and rates apply UK-wide on capital gains.

For income-taxed crypto activity (mining, staking, airdrops with services):

National Insurance can apply for self-employed mining/staking businesses.

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How Different Transactions Are Taxed

Buying crypto with GBP

Not a taxable event. Acquisition cost enters the relevant Section 104 pool.

Selling crypto for GBP

A CGT disposal. Apply matching rules (same-day, 30-day, then Section 104 pool) to determine cost basis. Gain = proceeds − cost basis − allowable fees.

Crypto-to-crypto swaps

A CGT disposal of the outgoing token at GBP fair market value at the moment of swap. The incoming token is acquired at that GBP value into its own Section 104 pool.

Mining

If hobby-scale (miscellaneous income): taxed as income at receipt at fair market value. If trade-scale (regular, organized, profit-motive): self-employed trading income, requiring Class 2/4 NI and Schedule D treatment.

Staking rewards

Generally treated as miscellaneous income at GBP fair market value on receipt. The disposal of those tokens is then a separate CGT event with cost basis equal to the income value.

Airdrops

Taxable as income if received in return for a service or activity (e.g., social-media task). If genuinely free with no consideration, no income tax — but disposal still attracts CGT with zero cost basis.

Hard forks

HMRC treats forked coins as acquired at zero cost basis with the holding history derived from the original allocation rule.

Employment in crypto

Salary paid in crypto is taxable as employment income at sterling value at the moment of receipt, with PAYE and NI applied by the employer (where UK-resident employer).

NFT trading

CGT applies to disposals of NFTs as chargeable assets. Trading at scale can recharacterize as a trade.

Gifts and spending

Spending crypto on goods or services is a disposal at fair market value. Gifts to anyone other than a spouse/civil partner are CGT events at market value.

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Cost Basis Methodology — Section 104 Pool, Same-Day, 30-Day Rules

UK crypto cost basis is the most procedurally complex in Europe. HMRC adapted the share identification rules from Taxation of Chargeable Gains Act 1992 to crypto. Three rules apply in order:

1. Same-day rule: Acquisitions on the same day as a disposal are matched first.
2. 30-day "bed and breakfast" rule: Acquisitions in the 30 days after a disposal are matched next. This prevents selling at a loss to crystallize tax relief and immediately rebuying the same asset.
3. Section 104 pool: All other holdings of the same token sit in a single pool with a running average cost. Disposals not matched to (1) or (2) come out of the pool.

The pool is per token, not per wallet or exchange. Your BTC across Coinbase, a self-custody wallet, and a hardware wallet sit in one Section 104 pool for HMRC purposes.

Worked illustration

Assume the following BTC activity:

• 1 Jan: buy 1 BTC at GBP 30,000.
• 1 Jun: buy 1 BTC at GBP 40,000.
• 1 Sep: sell 1 BTC for GBP 50,000.
• 15 Sep: buy 0.5 BTC at GBP 48,000 (within 30 days after the sale).

Section 104 pool before the September sale: 2 BTC at average cost GBP 35,000.

The September sale matches first against the 15 Sep purchase under the 30-day rule: 0.5 BTC matched at GBP 24,000 cost (proceeds half of GBP 50,000 = GBP 25,000 → gain GBP 1,000). The other 0.5 BTC comes out of the pool at GBP 17,500 cost (proceeds GBP 25,000 → gain GBP 7,500). Total gain: GBP 8,500. The pool now holds 1.5 BTC at average GBP 27,000.

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Reporting Requirements

UK crypto investors have two routes to report:

1. SA100 Self Assessment

• Report capital gains on the SA108 capital gains supplementary page.
• Report crypto income (mining, staking, airdrops) on SA100 main return, miscellaneous income box, or self-employment pages if trading.
• Deadline: 31 January after the end of the tax year (UK tax year runs 6 April → 5 April).
• For 2025/26 (ended 5 April 2026): online deadline 31 January 2027.
• Paper deadline: 31 October 2026 (rarely used).

You must file Self Assessment if your disposal proceeds exceed GBP 50,000 in the year or your gains exceed the GBP 3,000 allowance, even if no tax is due.

2. Real Time CGT service

For one-off disposals, HMRC offers an online "Report and pay your Capital Gains Tax" service. Less commonly used by active crypto traders.

Records (transaction logs, exchange CSVs, wallet addresses, GBP valuations) must be kept for at least 5 years after the 31 January submission deadline (so 2025/26 records until 31 January 2032).

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Real-World Examples

Example 1: HODLer with one big disposal

Sarah, basic-rate taxpayer in Manchester, bought 0.5 BTC for GBP 12,000 in 2021 and sold it in March 2026 for GBP 35,000.

• Proceeds: GBP 35,000; cost basis: GBP 12,000; gain: GBP 23,000.
• Annual exempt amount: GBP 3,000.
• Taxable gain: GBP 20,000 at 10% = GBP 2,000 CGT.
• Filing: SA100 + SA108 by 31 January 2027.

Example 2: Higher-rate trader using same-day and 30-day rules

James, additional-rate taxpayer, executes 200 trades in 2025/26 across BTC, ETH, and SOL. Net gains after Section 104 calculation: GBP 18,500.

• Annual exempt amount: GBP 3,000.
• Taxable gain: GBP 15,500 at 20% = GBP 3,100 CGT.
• Required: full Section 104 pool reconstruction with same-day and 30-day matching applied per asset.

Example 3: Staker with mixed income and gains

Priya stakes ETH and earns 0.8 ETH in rewards across 2025/26 with total GBP fair market value at receipt of GBP 2,400. She then sells 0.5 ETH (acquired both from staking and earlier purchases) for GBP 1,800.

• Income tax on staking rewards: GBP 2,400 at her marginal 40% rate = GBP 960.
• CGT calculation: requires Section 104 pool with the staking-acquired ETH and her other ETH purchases. Gain depends on pool average cost.

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DeFi Specifics

HMRC's 2022 DeFi guidance and 2024 consultation on DeFi lending and staking continue to evolve. Current conservative interpretation:

Lending and liquidity provision: HMRC takes the position that depositing crypto into a DeFi lending protocol or LP pool is a disposal if beneficial ownership transfers (which is technically true for most protocols issuing receipt tokens like aTokens or LP tokens). This is one of the most aggressive interpretations in Europe and means each Aave deposit, each Uniswap LP entry, and each Curve position is a CGT event.

Staking yield: Income at receipt for non-trade activity.

Wrapped tokens (wBTC, stETH): Generally treated as disposals on the conservative HMRC view, although lighter treatment is sometimes argued.

Liquidity-mining rewards: Income at receipt; subsequent disposal triggers CGT.

NFT royalties: Miscellaneous income or trading income depending on activity scale.

A 2024 HMRC consultation explored whether DeFi lending should be treated as "no disposal" similar to traditional securities lending. As of 2026 the response is still pending and the conservative disposal treatment remains in force.

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Common Pitfalls

1. Treating each exchange separately for cost basis. The Section 104 pool is per token across all wallets and exchanges combined.
2. Ignoring the 30-day bed-and-breakfast rule. Selling at a loss and rebuying within 30 days does not crystallize the loss against your pool — it matches against your repurchase.
3. Forgetting the GBP 50,000 proceeds reporting threshold. Even with no taxable gain, exceeding GBP 50,000 in disposal proceeds requires a Self Assessment.
4. Mining as a hobby vs trade misclassification. High-frequency, organized mining can be reclassified as a trade with NI consequences.
5. DeFi disposals on every protocol interaction. Easy to miss; can accumulate to thousands of taxable events.
6. Lost private keys or rugged tokens. Negligible-value claims are possible but require formal HMRC notification.
7. Spending crypto. Buying a coffee with BTC is technically a CGT disposal at fair market value.

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What Software Helps

• Koinly — strong UK Section 104 pool support, same-day and 30-day rules applied automatically, exports SA108 figures.
• CoinTracker — clean UK report, good API integrations.
• Recap — UK-built, designed specifically around Section 104 pool, HMRC-style reports, popular with UK accountants.
• CryptoTaxCalculator — Australian origin, supports HMRC matching rules.

For investors who want to monitor crypto allocations alongside ISAs, SIPPs, and general investment accounts, Freenance consolidates positions across exchanges with a unified GBP cost-basis view that complements specialist tax software.

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FAQ

What is the UK crypto tax allowance for 2026? The CGT annual exempt amount is GBP 3,000 for both 2025/26 and 2026/27. Net gains above that are taxed at 10% (basic-rate) or 20% (higher/additional-rate).

Is crypto-to-crypto a taxable event in the UK? Yes. HMRC treats every crypto-to-crypto swap as a disposal of the outgoing token at GBP fair market value, triggering CGT.

Do I have to report if I made a loss? No automatic obligation, but you should claim losses within four years to carry them forward indefinitely against future gains. If proceeds exceed GBP 50,000 you must still file Self Assessment.

How is staking taxed in the UK? Generally as miscellaneous income at the GBP fair market value when rewards are received. Subsequent disposal of those tokens then attracts CGT under the Section 104 pool method.

Are NFTs taxed the same as Bitcoin? For individual investors, yes — CGT on disposals as chargeable assets. NFT creators and high-frequency flippers can be reclassified as trading.

Disclaimer: This article is general guidance based on HMRC Cryptoassets Manual and Finance Acts as interpreted in early 2026. UK crypto tax treatment can change with each Budget. Always consult a UK chartered tax adviser for your specific situation before filing.

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