Which Taxes Apply?
Anyone who trades (buys/sells) or mines cryptoassets, or uses cryptoasset derivatives, needs to first consider if they are engaged in financial trading in cryptoassets (ie a business activity), rather than simply assuming they are classed as an investor and taxed under the capital gains tax regime/miscellaneous income regime.
HMRC state: "Only in exceptional circumstances would they expect individuals to buy and sell exchange tokens with such frequency, level of organisation and sophistication that the activities amount to a trade in itself."
Whether or not there is financial trading in cryptoassets is a complex area. We recommend you read our detailed guidance and consult a professional tax advisor to consider your specific circumstances.
Assuming the cryptoasset activity is not treated as a financial trade, here is an overview of the most common tax treatment for different types of crypto activity. Click the activity type for more detailed information.
Disposal/Activity Type | Capital Gains Tax | Income Tax |
|---|---|---|
✅ | ❌ | |
✅ | ❌ | |
✅ | ❌ | |
✅ | ❌ | |
❌ (if conditions met) | ❌ | |
❌ (if conditions met) | ❌ | |
❌* | ✅ (Sometimes) | |
✅ | ||
❌ | ❌ | |
❌^ | ❌ | |
❌* | ✅ | |
❌* | ✅ | |
Potential to claim capital losses | ❌ | |
✅ | ❌ | |
❌* | ✅ | |
❌ | ||
❌^ | ❌ | |
✅ (Individual discretion) | ✅ (Individual discretion) | |
❌ | ||
❌ | ||
❌ | ||
❌* | ✅ | |
❌* | ❌ | |
❌* | ✅ | |
❌* | ❌ | |
✅ | ❌ | |
❌* | ✅ |
* No Capital Gains Tax at the time of acquisition, but it is subject to capital gains tax when the cryptoasset is later disposed.
^ may affect Capital Gains Tax base cost, though.