How to Report Bitcoin Gains in the UK: A Complete Tax Guide for 2024

Understanding Bitcoin Tax Obligations in the UK

If you’ve profited from Bitcoin or other cryptocurrencies in the UK, you must report these gains to HMRC. Under current regulations, crypto assets are treated as property rather than currency, meaning Capital Gains Tax (CGT) applies when you dispose of them. This includes selling for GBP, trading for other cryptocurrencies, using Bitcoin to purchase goods, or gifting to non-spouses. Failure to report accurately can lead to penalties, interest charges, and HMRC investigations.

Are Your Bitcoin Gains Taxable?

You’ll owe Capital Gains Tax if your total taxable gains from all assets (including crypto) exceed your annual CGT allowance during a tax year (6 April – 5 April). Key triggers include:

• Selling Bitcoin for GBP or fiat currency
• Trading one cryptocurrency for another (e.g., BTC to ETH)
• Using Bitcoin to buy goods/services
• Gifting crypto to anyone except your spouse/civil partner

Note: Buying/holding Bitcoin isn’t taxable—only disposals trigger potential CGT.

How to Calculate Your Bitcoin Gains

Use this formula: Gain = Disposal Value – Purchase Cost – Allowable Expenses

1. Disposal Value: Market value in GBP when you disposed of Bitcoin
2. Purchase Cost: Original acquisition cost including fees
3. Allowable Expenses: Transaction fees, mining costs (if applicable), and professional advice fees

Example: Bought 0.5 BTC for £10,000 (£500 fees). Sold for £15,000 (£300 fees). Gain = (£15,000 – £300) – (£10,000 + £500) = £4,200.

Using Your Capital Gains Tax Allowance

For the 2023/24 tax year, the CGT allowance is £6,000. This drops to £3,000 in April 2024. You only pay tax on gains above this threshold. Spouses can combine allowances (£12,000 in 2023/24) by transferring assets tax-free before disposal.

Step-by-Step Reporting Process

1. Register for Self Assessment via GOV.UK if not already registered
2. Calculate gains for all crypto disposals during the tax year
3. Complete SA108 Form (Capital Gains section) and main SA100 tax return
4. Submit by 31 January following the end of the tax year (e.g., 31 Jan 2025 for 2023/24 gains)
5. Pay owed tax by the same deadline

Essential Record-Keeping Requirements

HMRC requires detailed records for 5 years after submission. Track:

• Transaction dates and types (buy/sell/trade)
• Amounts in cryptocurrency and GBP value at transaction time
• Wallet addresses and exchange records
• Receipts for allowable costs
• Calculations of gains/losses

Use crypto tax software (e.g., Koinly, CoinTracker) to automate tracking.

Frequently Asked Questions

Do I need to report if I haven’t sold my Bitcoin?

No. Holding Bitcoin isn’t taxable. Reporting is only required when you dispose of assets and realize gains above your allowance.

What if I made a loss on Bitcoin?

Report losses on your SA108 form. You can carry them forward indefinitely to offset future capital gains.

How do I value Bitcoin transactions in GBP?

Use the market value at transaction time. Reliable sources include exchange rates from CoinGecko, CoinMarketCap, or your trading platform.

Is Bitcoin mining taxable?

Yes. Mining rewards count as income taxed at your Income Tax rate (20%-45%). When you later sell mined coins, CGT applies to gains.

Can HMRC track my crypto transactions?

Yes. Since 2019, UK crypto exchanges share user data with HMRC under Common Reporting Standard rules. Non-compliance risks penalties up to 100% of owed tax plus interest.

Avoiding Penalties and Staying Compliant

Report gains accurately by the January deadline to avoid automatic £100 penalties and potential criminal prosecution for deliberate evasion. If you’ve underpaid in previous years, use HMRC’s Digital Disclosure Service to voluntarily correct returns. For complex cases (e.g., DeFi transactions, NFTs, or staking rewards), consult a crypto-specialized accountant. Staying compliant protects you from penalties while legitimizing your crypto investments.