HMRC Updates UK Crypto Tax Rules: What You Owe and How to Report It
What Counts as a Taxable Disposal in the UK
Under UK law, Capital Gains Tax (CGT) applies whenever you "dispose" of a cryptoasset. HMRC's guidance is explicit that disposal is a broad concept. It covers selling tokens for cash, exchanging one token for another, using crypto to pay for goods or services, and giving tokens away to another person. The only gift that escapes CGT at the point of transfer is one made to a spouse or civil partner.
When Income Tax comes first
Not every crypto receipt is a CGT event from the start. If you received tokens as employment income, for example as part of a salary or bonus arrangement, HMRC will have already taxed that value under Income Tax. When you later sell those tokens, CGT applies only to any additional gain you've made since you received them. You won't be taxed twice on the same pound of value.
The Annual Exempt Amount still applies
CGT is only due if your total gains across all assets in the tax year (6 April to 5 April) exceed the Annual Exempt Amount. If you're below that threshold, you still need to check whether you need to report, even if no tax is owed. The updated guidance confirms this reporting obligation sits separately from the payment obligation.
How to Calculate Your Crypto Gain
Working out your gain sounds straightforward: subtract what you paid from what you received. In practice, crypto complicates this because you often buy the same token at different times and at different prices.
The 30-day rule
If you sell tokens and then buy the same type of token again within 30 days, a specific matching rule applies. The cost used to calculate your gain is the cost of the tokens you bought within that 30-day window, not the pooled cost. This rule prevents a simple tax-avoidance technique where you sell at a loss, claim the loss immediately, and then buy straight back in.
Section 104 pooling
For tokens you hold beyond the 30-day window, HMRC uses a pooling system that mirrors the share identification rules for stocks. Every time you buy or receive tokens of the same type, the cost goes into a single pool. The pool tracks both the total number of tokens and their total cost. When you sell, you calculate the average cost per token and multiply it by the number sold.
HMRC gives a clear illustration of this in its guidance. If you hold 400 units of a token at a total pooled cost of £500, the average cost is £1.25 per token. Selling 200 of those tokens gives you an allowable cost of £250 to set against the sale proceeds. The pool is then reduced by those 200 tokens and that £250 of cost.
When market value replaces the actual price
One of the specific updates in the October 2026 refresh is clearer language around using market value rather than the actual transaction price to determine your gain. This is relevant in a number of situations, including when tokens were transferred to you without a straightforward arm's-length purchase. If you received tokens in circumstances where there was no clear market price paid, you use the market value at the time of the transaction as your cost base.
Allowable Costs You Can Deduct
Your taxable gain isn't just proceeds minus purchase price. HMRC allows you to deduct certain costs, and using them correctly can reduce your bill meaningfully.
What you can deduct
Allowable costs include the original cost of acquiring the tokens, transaction fees paid to execute the purchase, and costs of any professional services directly connected with the acquisition or disposal. HMRC's guidance notes that costs of a personal nature, or costs not wholly and exclusively for the transaction, cannot be deducted. Broad "portfolio management" fees are unlikely to qualify unless they can be directly attributed to a specific disposal.
The New Self Assessment Cryptoasset Section
The most operationally significant change in the October 2026 update is confirmation that a dedicated cryptoasset section is now part of the Self Assessment tax return, starting with the 2024 to 2025 return. Previously, crypto gains were reported within the general Capital Gains pages without a crypto-specific structure. The new section makes it harder to overlook reporting obligations and signals that HMRC is treating crypto as a mainstream asset class for compliance purposes.
What this means when you file
When you complete your 2024/25 Self Assessment return, you'll need to use the cryptoasset section rather than shoehorning your figures into generic CGT boxes. All figures must be reported in pound sterling. If your exchange records are denominated in another currency or in token units, you'll need to convert using the sterling exchange rate at the date of each transaction, not an average rate for the year.
Keeping accurate records throughout the year is no longer optional in any practical sense. HMRC can and does carry out compliance checks, and you'll be expected to produce records on request. The guidance is clear that records should cover the type and quantity of tokens involved in each transaction, the date, the value in sterling at the time, and the exchange or wallet used.
Exchange Reports Are Not Enough on Their Own
The updated HMRC guidance includes a pointed clarification about transaction reports provided by cryptoasset exchanges. Many UK holders rely on the CSV or PDF exports generated by their exchange as their primary tax record. HMRC now explicitly notes that these reports may be incomplete or inaccurate, and that responsibility for the correct figures on your return rests with you, not with the exchange.
What you should do
Cross-referencing your exchange exports against your own records is good practice. If you've used multiple exchanges, moved tokens between wallets, or used DeFi protocols, no single exchange export will capture the full picture. You'll need to consolidate records from every source, calculate pooled costs manually or with the help of a compliant crypto tax reporting process, and ensure the sterling values used match the actual transaction dates.
This is also the moment to consider whether your record-keeping for earlier tax years holds up. If gaps exist, the next section is directly relevant.
HMRC's Cryptoasset Disclosure Service for Earlier Years
One of the additions in the October 2026 update is a formal reference to HMRC's Cryptoasset Disclosure Service. This is the mechanism for individuals who have underpaid tax on crypto disposals in earlier tax years to come forward voluntarily.
Why voluntary disclosure matters
Voluntary disclosure typically results in lower penalties than being caught by a compliance check. HMRC has access to data from UK-registered exchanges, and its Connect system is increasingly capable of matching on-chain activity to individual taxpayers. Waiting to be found out is a higher-risk strategy than it may have seemed a few years ago. If you suspect you've under-reported gains in any year going back to when you first held crypto, the Cryptoasset Disclosure Service is the structured route to resolve that.
It's worth noting that the political conversation around UK crypto tax is active. Reform UK's proposal to cut crypto capital gains tax has attracted attention, but those are proposals, not law. The rules described in HMRC's October 2026 update are the current legal position and should be treated as such until any legislative change takes effect.
Practical Steps for UK Crypto Holders Right Now
The October 2026 update doesn't introduce a new tax. It sharpens the reporting infrastructure around an existing one. Here's what to prioritise:
- Gather transaction records from every exchange and wallet you've used since you first bought crypto, including records of transfers between your own wallets.
- Convert all transaction values to pound sterling at the date of each transaction.
- Apply the 30-day matching rule first, then pool remaining tokens by type using Section 104 rules.
- Identify any tokens received as income and confirm the Income Tax value already reported, so you calculate CGT only on the gain above that figure.
- Use the 2024/25 Self Assessment cryptoasset section for your filing, reporting in sterling.
- If you have gaps in earlier years, investigate the Cryptoasset Disclosure Service before HMRC contacts you.
Getting a structured crypto compliance review in place now, well before the January 2026 self-assessment deadline, gives you time to resolve any gaps without the pressure of an imminent filing date.
Source: HMRC / GOV.UK
Frequently Asked Questions
Do I pay crypto tax in the UK if I just swap one token for another?
Yes. HMRC treats a token-for-token exchange as a disposal of the token you give up. The proceeds for CGT purposes are the sterling market value of the token you receive at the time of the swap. You calculate your gain or loss on the token you disposed of, and the cost base of the token you acquired is that same market value.
What is the Section 104 pool and do I have to use it?
The Section 104 pool is HMRC's mandatory cost-pooling system for cryptoassets (and shares). You cannot choose a different method such as first-in, first-out for tokens held beyond the 30-day window. All tokens of the same type are pooled, and the average cost per token is used when you sell. This is not optional: it's the statutory method under UK tax law.
I received crypto as part of my salary. How do I calculate CGT when I sell?
Your employer should have reported the sterling value of the tokens as employment income on the date you received them, and that value was subject to Income Tax and National Insurance. When you sell, your CGT cost base is that same sterling value. Any increase above it is your capital gain; any decrease is a capital loss. You're not taxed again on the portion already taxed as income.
My exchange report shows all my transactions. Is that enough for HMRC?
No, not necessarily. HMRC's updated guidance explicitly states that exchange reports may be incomplete or inaccurate. They typically won't capture transfers between your own wallets, transactions on other exchanges or DeFi protocols, or airdrops. You're legally responsible for the accuracy of your Self Assessment return, so you need to verify and supplement exchange reports with your own records.
What happens if I have undisclosed crypto gains from previous tax years?
HMRC's Cryptoasset Disclosure Service provides a formal route to come forward voluntarily. Voluntary disclosure before HMRC opens an enquiry generally attracts lower penalties than being identified through a compliance check. HMRC receives data from UK exchanges and uses its Connect system to cross-reference on-chain activity, so the risk of non-disclosure is real and growing.
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