​How is income taxed versus capital when considering tax on cryptocurrency?

It’s not just about capital gains. If your crypto activity looks like business (mining, staking, providing services paid in crypto, holding as inventory) then tax on cryptocurrency may take the form of income tax plus National Insurance, rather than just CGT.

Examples

• Crypto received as payment for services → income tax.

• Rewards from mining or staking (where it’s a trade) → income tax.

• Later disposal of that crypto still triggers CGT on the gain above the value when received.

So, depending on your circumstances, you may be facing both income tax and tax on cryptocurrency via CGT.

What are the key CGT allowances and rates for tax on cryptocurrency in 2025/26?

For the tax year 2025/26 in the UK:

• The CGT annual exempt amount is £3,000.

• If your total gains (crypto + other chargeable assets) are below £3,000, you may pay no CGT on those gains.

• CGT rates for general assets (including crypto) are:

  • 18% for basic-rate taxpayers (on the gain that falls within the basic rate band)

  • 24% for higher-rate taxpayers (for the gain that falls into the higher rate band)

• Note: The rate change (from the prior 10%/20%) took effect after 30 October 2024, so any disposals before then follow earlier rates.

These are the headline figures for tax on cryptocurrency via CGT for disposals.

How to calculate your gain / loss for tax on cryptocurrency

Calculating what you owe for tax on cryptocurrency involves a few steps:

1. Determine the disposal proceeds: what you received in GBP at the date of disposal (or market value if non-GBP).

2. Establish the cost basis: what you paid (or deemed to have paid) for the crypto plus allowable costs (fees, etc).

3. Apply the pooling/matching rules: HM RC expects crypto assets of the same “type” to be pooled for cost basis, with special rules if you buy & sell within 30 days, etc.

4. Subtract cost basis from proceeds = gain or loss. If gain and your total gains exceed £3,000 then CGT is due (depending on your income band).

5. If you have a loss, you can offset it against other gains in the year; if unused, you can carry it forward.

Make sure your records are accurate — dates, amounts in GBP, fees, dispositions. HM RC is increasingly gathering data.

What’s changing in reporting & compliance for tax on cryptocurrency?

Significant changes are underway for tax on cryptocurrency reporting and compliance:

• The UK is implementing the international Crypto‑Asset Reporting Framework (CARF), meaning cryptoasset service providers must collect and report user identity & transactional data from 1 January 2026.

• Regulations made in June 2025 (SI 2025/744) require UK reporting crypto-asset service providers to report annually to HM RC.

• HMRC estimates this will raise an additional ~£315 m in tax revenue through 2029/30.

In practice: if you use an exchange or wallet provider, know that your transactions may be reported. The spotlight on tax on cryptocurrency is intensifying.

Practical tips: Staying compliant with tax on cryptocurrency

• Keep detailed transaction records: dates, amounts, GBP value at time, fees, wallet addresses (or at least exchange statements).

• Consider whether your activity may be viewed as trading (income tax) vs investing (CGT).

• Use your CGT allowance (£3,000) effectively: splitting disposals across tax years, using spouse allowances, etc.

• Claim losses: if you’ve made a loss on crypto, register it so you can offset against future gains.

• Start planning ahead for the CARF rules: even though they kick in January 2026, preparatory compliance matters now.

• Seek professional advice: given the complexity of tax on cryptocurrency, especially if you’re active, it’s wise to engage specialist assistance.

How we at Trueman Brown can help

If you’re navigating tax on cryptocurrency, the team at Trueman Brown are here to help.

We can assist with accurate calculation of gains and losses, advise on whether your activity is subject to income tax or CGT, help with self-assessment filings and ongoing compliance planning.

Contact us:

• Email: mark@truemanbrown.co.uk

• Phone: 01708 397262

We offer tailored support so you can be confident about your crypto tax position for 2025/26 and beyond.

FAQ

Q: When do I have to pay tax on cryptocurrency?
A: You trigger tax on cryptocurrency when you dispose of crypto (sell it, swap it, spend it, gift it except to spouse) and you make a gain. If you receive crypto as income (mining, services), you may face income tax too.

Q: What is the CGT allowance for cryptocurrency for 2025/26?
A: The annual exempt amount for 2025/26 is £3,000. Gains up to this threshold across all chargeable assets including crypto are tax-free.

Q: What rate of tax do I pay on crypto gains?
A: For disposals that give rise to CGT: 18% for basic‐rate taxpayers, 24% for higher‐rate taxpayers in 2025/26.

Q: Are crypto trades (one coin for another) taxable?
A: Yes – swapping one crypto for another counts as a disposal, so you may owe CGT on the gain.

Q: What if I have a loss on cryptocurrency?
A: A loss can be offset against gains in the same tax year, or carried forward to offset against future gains — provided you register the loss with HM RC.

Q: Does the new CARF reporting mean I’ll automatically be taxed more on crypto?
A: Not automatically, but the increased transparency means HM RC has more data and can better match transaction records to self-assessment returns. So you must ensure your calculations for tax on cryptocurrency are correct.

Q: Can I hold crypto in an ISA and avoid tax on cryptocurrency?
A: At present, most crypto-assets cannot be held in a stocks & shares ISA. There are tentative developments regarding crypto ETNs (exchange traded notes) for ISAs, but rules are changing. For now, you should assume your crypto holdings are outside ISA sheltering. (See MoneyWeek piece Oct 2025)