Crypto is taxed in most countries as property or a capital asset, not as currency. Selling crypto, swapping one coin for another or spending it is usually a disposal that can trigger capital gains tax, while crypto received as pay or as mining or staking rewards is usually taxed as income. Buying and holding is generally not taxable.
Which crypto transactions are taxable?
| Transaction | Usually taxable? | Typical treatment |
|---|---|---|
| Buying crypto with pounds or dollars | No | Sets your cost basis |
| Holding crypto | No | No tax until you dispose of it |
| Moving crypto between your own wallets | No | Not a disposal, but a network fee paid in crypto can itself be a small disposal |
| Selling crypto for cash | Yes | Capital gain or loss |
| Swapping one crypto for another | Yes | Capital gain or loss on the crypto you gave up |
| Paying for goods or services with crypto | Yes | Capital gain or loss |
| Receiving crypto as salary or for work | Yes | Income tax (and possibly payroll taxes) on the value received |
| Mining and staking rewards | Usually | Income at market value when received; capital gains tax when later sold |
| Gifts to a spouse or civil partner (UK) | No | Treated as no gain, no loss |
| Donating crypto to a UK charity | No | No capital gains tax for the donor |
How do capital gains tax and income tax apply to crypto?
Capital gains tax applies to the profit when you dispose of crypto: the value you receive minus your allowable cost, which includes the purchase price and transaction fees. Income tax applies to crypto you receive as earnings, based on its market value at the time you receive it; that value then becomes your cost when you later sell. HMRC says that, for most individuals, buying and selling tokens is investment activity, so gains fall under capital gains tax rather than income tax.
Worked example (UK): you buy 1 ETH for £2,000 plus a £20 fee, and later sell it for £3,500 with a £15 fee. Your gain is £3,500 − £15 − £2,020 = £1,465. If that is your only gain in the 2026/27 tax year, it is covered by the £3,000 annual exempt amount and no capital gains tax is due.
How is crypto taxed in the UK and US?
| Rule | United Kingdom (HMRC) | United States (IRS) |
|---|---|---|
| Legal treatment | Cryptoassets are property; most individuals pay capital gains tax | Digital assets are property (Notice 2014-21, as modified by Notice 2023-34) |
| Capital gains rates | 18% within the basic-rate band, 24% above it (disposals since 30 October 2024) | Long-term (held over a year): 0%, 15% or 20%; short-term: ordinary rates of 10% to 37%; 3.8% net investment income tax may apply above $200,000 (single) or $250,000 (married filing jointly) |
| Tax-free amount | £3,000 annual exempt amount | No allowance, but the 0% long-term rate applies to taxable income up to $49,450 (single) or $98,900 (married filing jointly) |
| Cost basis method | Same-day rule, then 30-day rule, then the Section 104 pool | Specific identification of units, otherwise first-in, first-out |
| Staking and mining rewards | Miscellaneous income at the sterling value when received (unless trading) | Ordinary income at fair market value when you gain control (Rev. Rul. 2023-14) |
| How to report | Self Assessment, cryptoasset section (2024/25 returns onwards), if gains exceed the allowance | Form 8949 and Schedule D; answer the digital asset question on Form 1040 |
Rules elsewhere vary widely: Germany exempts gains on crypto held for more than a year, for example. Our comparison of crypto tax by country covers Germany, Australia, Canada, Portugal, Singapore and the UAE.
What information do tax authorities receive about your crypto?
- United States: brokers report gross proceeds on Form 1099-DA for sales on or after 1 January 2025, so the first forms reached customers in early 2026. From 1 January 2026 they also report cost basis for covered assets acquired and held in the same account.
- United Kingdom: under the OECD Crypto-Asset Reporting Framework (CARF), UK cryptoasset service providers have collected user and transaction details since 1 January 2026, including for UK-resident users, and must send the first reports to HMRC by 31 May 2027.
- European Union: the DAC8 directive applies the same kind of reporting from 1 January 2026, with the first exchanges between EU tax authorities due by 30 September 2027.
- Worldwide: the OECD lists 77 jurisdictions committed to CARF exchanges by 2029, as of its September 2026 update.
These reports give tax authorities your transaction data directly, so mismatches between platform reports and your tax return are far easier to spot than before.
How do you calculate your crypto tax?
- Export the full transaction history from every exchange, wallet and platform you used.
- Identify each disposal (sale, swap or spend) and each income event in the tax year.
- Record the value in your home currency at the time of each transaction.
- Work out the cost of what you disposed of using your country's matching or cost basis rules.
- Net gains against losses, apply any allowance and use your rate to find the tax due.
- Report on your tax return and keep the records. Our guide to crypto tax record keeping lists what to keep and for how long.
Crypto tax software can import exchange files and apply matching rules, but you remain responsible for the result, so check its output. Staking adds income events; our explainer on how staking rewards are earned covers the mechanics, and our guide to legal ways to reduce crypto tax explains allowances and loss rules.
Frequently Asked Questions
Do you pay tax on crypto if you don’t sell it?
Usually not. In the UK, US and most other countries, buying crypto with cash and holding it is not a taxable event. Tax normally arises when you dispose of it (sell, swap or spend it) or when you receive crypto as income, such as pay, mining or staking rewards.
Is swapping one cryptocurrency for another taxable?
In the UK and the US, yes. HMRC treats exchanging one cryptoasset for a different one as a disposal, and the IRS treats it as a sale of property. You calculate the gain or loss using the pound or dollar value of what you received at the time of the swap.
What is the UK capital gains tax rate on crypto in 2026/27?
Gains on cryptoassets are taxed at 18% for the part that falls within your basic-rate band and 24% above it. These rates have applied to disposals since 30 October 2024. The first £3,000 of total gains in the 2026/27 tax year is covered by the annual exempt amount.
Do crypto exchanges report to the IRS and HMRC?
Increasingly, yes. US brokers report gross proceeds on Form 1099-DA for sales from 1 January 2025 and cost basis for covered assets sold from 1 January 2026. UK cryptoasset service providers have collected user data since 1 January 2026 under the Crypto-Asset Reporting Framework, with first reports to HMRC due by 31 May 2027.
Do I have to report crypto losses?
Reporting losses is what lets you use them. In the UK you must report a capital loss to HMRC within four years of the end of the tax year to offset it against future gains. In the US, losses on Form 8949 offset gains and up to $3,000 a year of ordinary income.
Sources & References
- HMRC — Check if you need to pay tax when you sell cryptoassets (accessed 21 Oct 2026)
- GOV.UK — Capital Gains Tax rates and annual tax-free allowances (accessed 21 Oct 2026)
- IRS — Digital assets (property treatment, Rev. Rul. 2019-24 and 2023-14) (accessed 21 Oct 2026)
- IRS — Instructions for Form 1099-DA (2026) (accessed 21 Oct 2026)
- HMRC — Reporting cryptoasset user and transaction data (Crypto-Asset Reporting Framework) (accessed 21 Oct 2026)
Reviewed against the cited official sources on 21 October 2026.
Disclaimer: Educational content only. Wealtii is early-stage and is not regulated by any financial regulator. Tax and legal rules change frequently and differ by country. This article is general information, not tax or legal advice — consult a qualified professional in your jurisdiction.
