Money matters in the UK are changing a lot right now. More people invest in digital assets, so rules about taxes, regulations are changing quickly to match. The tax rules will shift significantly in 2025, as the tax system becomes more advanced, and officials pay closer attention to detail. It’s more vital than ever for people who invest, as well as companies, to know what the regulations are.
Here’s a simple look at UK crypto taxes for 2025. It covers the basic rules, tricky situations, and fresh ways the government will check taxes are paid correctly, impacting how you report crypto. This helps people who invest, and also companies, understand what is happening so they can move forward clearly, feeling secure.
People in the UK are increasingly investing in digital currencies, a clear change in how they handle their money. A report from 2025 shows that more people in the UK now own cryptocurrency. Ownership grew from 18% in 2024 to 24% in 2025. This year showed the biggest jump compared to last year, in every country we looked at. People are becoming more interested in digital money.
Many people now use this, so the market has grown a lot. The UK cryptocurrency market totalled $341.45 million in 2024. Experts forecast it will grow to $1060.36 million by 2035, a yearly rate of 10.85% between 2025 to 2035. Growth comes from important areas, especially buying, selling, which led the market in 2024. We expect buying, selling to improve quickly. Big financial companies are getting involved, too. IG Group will start letting regular people trade crypto in June 2025. Mastercard teams with Kraken to make crypto payments more available in Europe, also the United Kingdom.
This market is growing quickly, showing a basic shift in how money works. Something people used to think was unusual now involves lots of people, a truly large group. Tax agencies have observed these changes, so they are taking steps to make sure people follow the rules, also to collect more taxes. The UK government’s plans for the future show a change, moving from responding to problems to preventing them.
To figure out UK taxes on crypto, you really need to know how the tax authority views these digital currencies. The tax authority clearly states cryptocurrencies aren’t like regular money. They don’t treat them as cash. They fit into categories like things you can own, similar to items such as stocks, shares, or gold.
Understanding this category is key to UK rules about taxes on crypto. This means familiar tax laws for profits from sales, also income tax, that usually cover things people own, now work the same way for digital items. Here’s how it works: money you make from buying, selling, or trading cryptocurrencies faces a different tax, called Capital Gains Tax. Regular income from jobs or services gets taxed as Income Tax. Knowing this basic information helps people figure out their taxes correctly. It’s the main source of trouble for many people who invest.
How the UK taxes crypto: Looking at income tax versus capital gains tax. When you sell something valuable, like stocks or property, for more than you paid for it, the profit is called a capital gain. The government taxes this profit; it’s called Capital Gains Tax. The amount of tax you pay depends on how long you owned the item, your income, also the specific type of asset.
Dealing with crypto taxes in the UK starts with knowing the main difference between how the two taxes work: Capital Gains Tax, also Income Tax. Your crypto taxes depend on how the tax authority categorises what you do with digital currencies.
Most people will be seen as investors by the tax authority. They will pay tax on any profits when they sell investments. This is for people who purchase cryptocurrency, keep it for a while to potentially profit, then sell when the market seems right.
A few people trade finances as a business. They buy, sell quickly, often, hoping to earn money. People pay more tax, including Income Tax, National Insurance, on the money they make from business deals. HMRC looks at several things, called “Badges of Trade,” to decide this. They check how much is happening, how things are structured, if it looks like a business, and how much chance of loss there is.
You pay Capital Gains Tax when you sell something that has become more valuable, or otherwise get rid of it, making a profit. It’s important to know that getting rid of crypto isn’t just about trading it for regular money. You have a taxable event when you sell an asset, give it away, or when it becomes worthless. Here are some common situations:
Profit happens when you sell something for more than what you initially paid for it. It’s the amount you gain, figured by subtracting the original price from the selling price.
For the tax year 2024 to 2025, a big shift means more people now need to consider the Capital Gains Tax. You can now make £3,000 profit from investments each year without paying tax, a decrease from £6,000 last year. This limit covers all profits, not only from cryptocurrency. Profits from stocks or real estate also affect this amount.
If you earn more than £3,000, the tax you pay depends on your total income, specifically what tax group you fall into.
Navigating the UK’s crypto tax landscape begins with understanding the critical distinction between two primary tax regimes: Capital Gains Tax and Income Tax. The type of tax an individual is liable for depends entirely on how HMRC classifies their crypto-related activities.
For gains above the £3,000 allowance, the tax rate depends on an individual’s income tax bracket.
Income Tax Rate Band | Annual Income Range | CGT Rate on Assets | Annual Exempt Amount (2024/2025) |
Basic Rate | Up to £50,270 | 18% | £3,000 |
Higher Rate | £50,271 – £150,000 | 24% | £3,000 |
Additional Rate | Over £150,000 | 24% | £3,000 |
Note: The CGT rate for residential property remains 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers.
To prevent tax avoidance strategies, HMRC has established a specific, mandatory order for calculating the cost basis of crypto disposals. This framework, known as the “share pooling method,” ensures that an investor cannot simply choose which assets to dispose of to create losses for tax purposes artificially. The rules must be applied in the following order:
While CGT applies to the disposal of crypto assets, Income Tax applies to cryptocurrency that is received as income. This income is added to an individual’s total annual earnings and is taxed according to their personal income tax bracket.
Income tax liability is typically triggered by activities that involve earning new crypto assets, rather than simply disposing of existing ones. These include:
For the 2024/2025 tax year, the standard Income Tax rates apply to all income, including that derived from crypto.
Income Tax Band | Annual Income Range | Income Tax Rate |
Personal Allowance | Up to £12,570 | 0% |
Basic Rate | £12,571 – £50,270 | 20% |
Higher Rate | £50,271 – £125,140 | 40% |
Additional Rate | Over £125,140 | 45% |
An individual’s personal allowance of £12,570 is tax-free. Furthermore, the £1,000 Trading Allowance can apply to small-scale or miscellaneous income, offering a tax exemption on earnings up to this amount.
Digital money becomes trickier, and taxes get more complicated, too. You really need to know the details of things like digging for crypto, locking up crypto to earn rewards, decentralised finance, or non-fungible tokens to fully follow the rules.
How taxes work for rewards from mining or staking depends on whether you do it casually or to make a profit. If you mine digital tokens as a hobby, the worth of those tokens when you get them counts as extra income. You will pay tax again when you later sell those tokens. You can subtract costs like higher electric bills from this money. You generally pay taxes on staking rewards when you get them, then again on any profit when you sell.
People get tokens without paying, but the government taxes these gifts in two different ways. You don’t owe income tax if you get tokens without doing work or providing a service for them. You will pay capital gains tax when you sell these items. The price you initially pay for them is what they were worth when you first got them. However, if someone does something to get the airdrop, like participate in a social media event, the token’s worth counts as other income. They owe taxes on it right away.
Dealing with taxes for DeFi is really complicated in the crypto world. Participating in decentralised finance, such as locking up crypto, loaning digital assets, or adding funds to platforms, creates tax situations. These tax issues aren’t always clear at first glance. Tax authorities say you may owe taxes if you move digital coins to a smart contract or a place to trade them, especially when control of those coins shifts to someone else. This holds, even when someone anticipates getting those digital assets again soon or cannot easily convert them to traditional money right now. This often results in a large, unexpected tax payment with no easy solution, showing a major problem where old tax rules clash with modern finance tools.
The tax authority understands this issue, so they asked for public feedback in 2023. They suggested ignoring sales when tokens are borrowed or used to earn rewards, provided you still have the same financial benefit from them. These ideas aren’t official rules yet; however, they demonstrate that people acknowledge the present system causes problems for those who invest money. Dealing with this difficulty shows why getting help from an expert is essential when you use DeFi.
NFTs usually follow the tax laws created for other digital currencies. When you sell a non-fungible token, it’s considered a taxable event. Any money you make from the sale is subject to taxes. When you get an NFT, for example, by playing a game, the tax office views it as income. You must calculate the NFT’s worth when you received it, then include that value with your other earnings. Purchasing a non-fungible token itself doesn’t create a tax obligation; however, you can use any money lost when you sell one to lower taxes on any profits you make later.
The integrity of a tax return hinges on meticulous record-keeping. With the new enforcement measures on the horizon, the importance of this practice cannot be overstated.
The onus is entirely on the individual to keep comprehensive records for every crypto transaction. This is because crypto exchanges and wallet providers may only keep transaction data for a short period or may even cease to exist, making it the individual’s sole responsibility to maintain a complete audit trail from acquisition to disposal.
HMRC has a clear list of the minimum information required for each crypto transaction to demonstrate compliance and prove a cost basis. This includes :
A simple spreadsheet or a dedicated crypto tax application can be used to track this information.
For the 2024/2025 tax year, HMRC has made a significant change to the self-assessment process, requiring taxpayers to separately identify amounts relating to crypto assets on their self-assessment tax return forms. This heightened scrutiny signals that HMRC is actively seeking to understand the crypto activity of taxpayers better.
The reporting deadline for self-assessment is January 31st of the tax year following the one in which the crypto activity took place. Taxpayers who have not filed a tax return before must inform HMRC that they have untaxed income by registering for Self-Assessment to receive a Unique Taxpayer Reference (UTR).
The following table provides a clear checklist for the essential records to maintain for every crypto transaction.
Your Essential Crypto Tax Record-Keeping Checklist |
Transaction Details |
Type of Crypto asset |
Transaction Date and Time |
Transaction Type (e.g., Buy, Sell, Swap, Gift, Stake, Mine) |
Number of Units Involved |
Value of Transaction in GBP (at time of transaction) |
Fees Paid (e.g., gas fees, exchange fees) |
Portfolio Details |
Cumulative Total of Units Held |
Disposal Proceeds |
Calculated Gain or Loss |
Supporting Evidence |
Bank Statements |
Wallet Addresses |
Transaction IDs |
The government plans a big change in how it collects taxes on cryptocurrency. They will start using a new system called the Crypto-Asset Reporting Framework. Starting January 1, 2026, the UK will use a worldwide system. This system helps make taxes on digital assets clearer internationally, aiming to stop people from avoiding taxes.
Starting January 1, 2026, every company offering crypto services, even companies located in other countries, must gather certain personal information along with details about user transactions. We will send information like your complete name, home address, birthday, or tax ID number, for example, a National Insurance number, to the tax authority. Companies offering crypto services must share a report detailing their customers’ crypto dealings.
This system changes things in a big way. Now, the tax authority will use a computer program to connect a person’s money information from different places, like trading platforms or digital accounts, straight to their tax details. This change makes it so everyone has the same knowledge, removing an advantage people had when they didn’t follow the rules for crypto. This plan should bring in £315 million in taxes by April 2030, showing how important it is to the government for the future. It’s almost guaranteed you will face problems if you don’t follow the rules; it’s not a small chance anymore.
HMRC gains new tools. It will compare information reported by companies with what people report on their tax forms. A problem with your taxes might start an inquiry from the tax office. People, or businesses offering services, who do not report information, report it late, or give incorrect details, will receive substantial fines, as much as £300 for each time this happens. Tax authorities might send a letter to people they think haven’t reported digital currency dealings. This letter gives those people a chance to share information about taxes they still owe.
CARF changes tax filing from a tedious task to a key element of smart money management. To avoid problems with future checks or fines, be prepared, be careful, and get help from experts.
The UK’s crypto tax landscape in 2025 is more complex, regulated, and enforced than ever before. For both individuals and businesses, understanding the nuances of CGT, Income Tax, DeFi, and the new CARF framework is crucial to financial security and peace of mind. Navigating this environment without professional guidance can lead to unforeseen tax liabilities, compliance penalties, and a significant amount of stress.
Lanop Business and Tax Advisors provides more than just standard accounting services; we are a dedicated business partner committed to providing clear, proactive advice that helps clients thrive in this new digital economy. Our approach is to keep clients involved and explain not just “what should be done but also why it should be done,” empowering them with a deeper understanding of their financial position.
Our specialised crypto tax services are specifically designed to address the challenges outlined in this guide:
With a long-standing reputation for transparency and a near 99% client retention rate, the firm has established itself as a trusted and reliable partner for individuals and businesses alike. Led by CEO Aurangzaib Chawla, the team possesses the expertise to navigate the complexities of modern business models and financial regulations.
The UK’s crypto tax landscape has evolved. The days of ambiguity are being replaced by a sophisticated, globally coordinated system of enforcement. The rapid growth of the market, the reduction in tax-free allowances, and the implementation of frameworks like CARF make it clear that proactive compliance is an absolute necessity.
The knowledge shared in this guide is the first step toward building a resilient financial future in the digital age. The next step is to secure a trusted partner who can translate this knowledge into a confident and stress-free strategy. With the right guidance, you can navigate the complexities of crypto taxation and focus on what truly matters: empowering your financial future.
In Britain, people view cryptocurrency as possessions, not money. You pay taxes on any profit you make from it, using a tax called Capital Gains Tax. If you sell, trade, or otherwise get rid of cryptocurrency, any money you earn is a gain. The government might tax that gain. You figure the tax using the difference between what you paid for something, what you sold it for. Report this on your tax return.
You need to tell the tax people about crypto dealings if you made money or lost money. You need to pay taxes on cryptocurrency dealings. Report these dealings when you file your tax return. HMRC needs you to save careful notes about each money movement, like when it happened, how much it was, also any fees. This helps you report taxes correctly.
In the UK, you don’t pay taxes on a certain amount of profit from cryptocurrency. For the tax year starting in 2025, you can earn up to £12,300 tax-free. This benefit comes from the Capital Gains Tax rules. You won’t need to pay taxes on profits if the total money you make from selling things, even digital currencies, stays below a certain amount. If your profits are higher than this figure, you must pay tax on the extra amount.
You likely owe income tax, not a tax on investment profits, when you get money in digital currency. If you get paid with digital money for work or services, the value of that money when you receive it counts as income. You must pay taxes on it like regular income. You might get money from a job, work you do on the side, or rewards for holding digital currencies. You pay taxes on this money like you do with your usual earnings.
If you buy, sell crypto often in the UK, you owe income tax instead of tax on profits from investments. If you earn money with cryptocurrency as your job or a regular business, the government taxes those earnings like wages, not like investments. This really matters to people who buy, sell crypto every day, or use borrowed money to trade. The tax authority might see this as a business, so you need to declare any money you make from it when you file your taxes.
Aurangzaib Chawla is a UK-based tax advisor and Managing Partner at Lanop Business & Tax Advisors. With nearly two decades of experience, he supports individuals, landlords, and SMEs with proactive tax planning and compliance. Known for simplifying complex tax legislation, Zaib helps clients minimise liabilities while building sustainable, tax-efficient strategies for long-term success.
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At Lanop, I am providing my services as the Managing Partner and Tax Specialist. My expertise includes helping medium and small-scale businesses in their accountancy and legal requirements, business start-up support, strategic review, payroll system review and implementation, VAT and tax compliance to cloud accounting. I am also an expert in financial reporting, identifying and monitoring risks, strategic business development, client retention, market acquisition and deals closure by carefully planning my sales cycle.
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