Tax Treatment of Gifting Crypto

Gifting crypto is considered a taxable disposal. If gifting or selling cryptoassets for less than market value, the disposal proceeds are the sterling market value of the cryptoasset sold, regardless of the fiat money paid to the seller.

So even when you receiving nothing in return for the crypto, you are treated notionally as making a sale at full market value. This is the position whether or not the buyer and seller are connected parties.

Receiving cryptoassets as a gift

Is not a taxable event however, but the sterling market value at the date of receipt is treated as the acquisition cost for capital gains tax purposes. When the crypto received is later disposed of, it is subject to the capital gains tax regime.

Spouse gifts and gifts to charity, CASCs and for a National Purpose are subject to different tax rules.

Loss on gifts to connected parties

If a capital loss arises on a disposal to a connected party, it cannot be set against other capital gains in the year. This is called a ‘clogged loss’.

It can only be set against gains to the same connected person at a time when they remain connected:

  • in the same tax year; or

  • carried forward to offset against future gains made on disposals to the same person.

These can be gains of any type, such as shares or property; not just cryptoassets.

If the gift or sale at less than market value is to a spouse or civil partner, any actual consideration (e.g. payment) received by the seller is ignored. There is no gain and no loss, provided the detailed rules are met. Therefore the disposal proceeds are equal to the sterling allowable costs of the seller.

💍pageSpouse Transfers

For disposals of cryptoassets to a UK, EU or EEA charity or community amateur sports club (CASC); where the payment is no more than the CGT allowable costs and it is not a tainted donation; it is treated as a disposal for no gain and no loss. Therefore the disposal proceeds are deemed to equal the allowable costs. If the payment by the recipient is more than the allowable costs, there is a capital gain and the disposal proceeds are the actual payment received by the seller. See our further guidance for the detailed rules and conditions.

Donations of cryptoassets do not qualify for the gift aid income tax relief. Gift aid income tax relief is only available for donations of fiat currency or certain other assets (shares, listed securities, property) to UK/EU/EEA qualifying charities as per the definition above.

🎗️pageGifts to Charity, CASCs & Bodies for a National Purpose

Gifts in Recap

Recap has been designed from the ground up to work out the capital gains impact of gifting cryptoassets.

  1. Simply connect your exchange accounts or wallets through our automated integrations or enter your data manually via the user interface or CSV file.

  2. Recap treats gifts as if you have sold them for GBP at market value. All GBP valuations of the assets are determined by Recap's own market valuation engine using both foreign and cryptocurrency exchange rates.

  3. See the tax impact of every gift (example below) in the tax tab or download a PDF tax report

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