How to Report Crypto Income in the UK: A Complete HMRC Tax Guide

Understanding Crypto Tax Obligations in the UK

If you’ve earned profits from cryptocurrency in the UK, you must report this income to HMRC. Crypto assets like Bitcoin, Ethereum, and NFTs are treated as property for tax purposes – not currency. This means capital gains tax applies to profits from selling or exchanging crypto, while income tax may apply to crypto earned through activities like mining or staking. Failing to report accurately risks penalties up to 100% of owed tax plus interest.

What Counts as Taxable Crypto Income?

HMRC categorizes crypto activities into two taxable events:

• Capital Gains: Profits from selling crypto, swapping tokens, or spending crypto on goods/services when the asset has increased in value since acquisition.
• Income: Crypto received from mining, staking rewards, airdrops, or as payment for freelance/services. Income tax applies based on GBP value at receipt.

Non-taxable events include: Buying/holding crypto, transferring between personal wallets, or donating to charity.

Step-by-Step Guide to Reporting Crypto to HMRC

1. Calculate Your Gains and Income

• Use crypto tax software (e.g., Koinly, CoinTracker) to track all transactions
• For capital gains: Calculate profit per disposal: Sell Price – Buy Price – Allowable Costs
• For income: Convert rewards/payments to GBP value at receipt date

2. Complete Your Self Assessment Tax Return

• Register for Self Assessment by October 5th following the tax year (April 6-April 5)
• Report capital gains in the Capital Gains Summary section (SA108 form)
• Declare crypto income under Additional Income or Self-Employment pages

3. Pay Your Tax Bill

• Capital Gains Tax (CGT) rates: 10% (basic rate) or 20% (higher rate) after using your £6,000 annual exemption (2023/24)
• Income Tax rates: 20%-45% depending on total earnings
• Payment deadline: January 31st following the tax year end

Essential Record-Keeping Requirements

Maintain detailed records for at least 5 years after submission:

• Transaction dates and values in GBP
• Wallet addresses and exchange records
• Calculations for cost basis and gains
• Receipts for hardware/software used in mining

Top 5 Crypto Tax Mistakes to Avoid

1. Ignoring small transactions: Every crypto disposal counts, including micro-transactions.
2. Forgetting cost basis: Track acquisition costs including fees and mining expenses.
3. Mixing personal and business wallets: Keep separate wallets for clarity.
4. Missing deadlines: Late filings trigger automatic £100 penalties.
5. Omitting DeFi activities: Liquidity pool rewards and loan interests are taxable income.

Frequently Asked Questions

Do I need to report crypto if I made a loss?

Yes. Reporting losses allows you to carry them forward to offset future gains.

How is crypto taxed when received as salary?

Employers must convert to GBP and deduct Income Tax/NI via PAYE. You still report it on your SA100.

What if I use multiple exchanges?

Consolidate all transaction histories. HMRC receives data from UK exchanges under Common Reporting Standards.

Are NFTs taxed differently?

NFTs follow the same CGT rules. Royalties from NFT sales count as miscellaneous income.

Can HMRC track my crypto?

Yes. Through blockchain analysis, international agreements, and UK exchange reporting. Non-compliance risks investigations.

Final Checklist Before Submission

• Verify all exchange/wallet data is complete
• Apply the £6,000 CGT allowance (2023/24)
• Calculate tax using HMRC’s exchange rates
• File by January 31st deadline

When in doubt, consult a crypto-specialist accountant. HMRC’s Cryptoassets Manual provides detailed guidance, but professional advice ensures compliance with evolving regulations.