Crypto isn’t in a grey zone anymore. In 2025, HMRC has doubled down on enforcement: data-sharing with major exchanges, “nudge letters” to suspected under-reporters, and harsh penalties for non-compliance.
Whether you’re a casual investor, a DeFi degen, or a professional trader, you need to know how your crypto is taxed. This guide breaks it all down 👇
🔎 How HMRC Views Crypto
- Crypto is property, not currency.
- That means Capital Gains Tax (CGT) rules apply when you dispose of it.
- A disposal includes:
- 💷 Selling for GBP or another fiat
- 🔄 Swapping one crypto for another
- 🛒 Spending crypto on goods/services
- 🎁 Gifting (except to a spouse/civil partner)
💰 Capital Gains Tax (CGT) on Crypto
- Annual allowance: £3,000 (2025/26).
- Tax rates:
- 10% if you’re a basic-rate taxpayer
- 20% if you’re higher/additional rate
👉 Why it matters: the allowance is so low now that just a few profitable trades can put you over the limit.
Example:
- You bought 1 ETH at £1,000.
- You sell it at £3,000.
- Profit = £2,000.
- If your total gains for the year exceed £3,000, the extra is taxed at 10% or 20%.
🧾 Income Tax on Crypto
Some crypto earnings are treated as income, not capital gains:
- Staking rewards & airdrops → Taxed as income at 20%, 40% or 45% (depending on your band).
- Mining → Income tax (if regular/large scale, HMRC may treat as self-employment).
- DeFi lending & yield farming → Often taxed as income when received.
- Later disposals → Subject to CGT again.
💡 Double taxation trap: You could pay income tax when you receive rewards, then CGT when you sell those tokens later.
🎨 NFTs & Gaming Tokens
- NFT trades → usually CGT.
- Creating & selling NFTs → often Income Tax (treated like running a business).
- Play-to-earn tokens (P2E) → usually taxed as income when earned.
📉 Using Losses
- “Allowable losses” can offset gains in the same year.
- If losses > gains, you can carry them forward indefinitely.
- Losses must be reported to HMRC to count.
Example:
- £20k gains, £8k losses → you’re taxed on only £12k.
🕵️ HMRC Investigations in 2025
HMRC now:
- Receives exchange data directly under international agreements.
- Sends “nudge letters” asking taxpayers to come clean.
- Runs blockchain analytics to spot undeclared trades.
Penalties:
- ⏰ Late filing: up to 100% of tax owed.
- 🚨 Deliberate evasion: up to 200% + possible criminal action.
🛠️ How to Stay Compliant
- Keep records – every transaction, wallet, and CSV.
- Export annually – don’t wait until January.
- Use tools or professionals – reconcile data to avoid errors.
- Declare everything – even if you think “HMRC won’t notice.” Spoiler: they will.
✅ Key Takeaways (UK)
- Crypto is property → CGT applies to disposals.
- Staking, mining & many DeFi activities = Income Tax.
- The £3,000 allowance is tiny — easy to exceed.
- HMRC is aggressively enforcing crypto compliance in 2025.
- Losses can reduce your bill, but only if reported.