Crypto is taxed as property in both the US and the UK. Buying and holding isn't taxed, but selling, swapping or spending crypto can create a capital gain, and crypto received as pay, mining or staking rewards is usually taxed as income. Keep records of every transaction.
Plenty of people find out how crypto is taxed the hard way, when their exchange sends a tax form or a letter arrives asking about trades they'd forgotten. The rules aren't as mysterious as they look. In both the US and the UK, crypto is mostly treated like an asset you own, and tax is triggered when you get rid of it or earn it. Here's how it works, in plain English. It's general information, not tax advice, so check your own situation with an accountant.
The one idea that explains most of it
Tax authorities don't see crypto as money. They see it as property. Buying it with cash and holding it usually isn't taxed. What's taxed is the moment you dispose of it at a gain, or the moment you receive it as income. Once you've got that, the rest of the rules fall into place.
What usually triggers tax
| What you do | US treatment | UK treatment |
|---|---|---|
| Buy crypto with cash and hold it | Not taxable | Not taxable |
| Sell crypto for cash | Capital gain or loss | Capital Gains Tax on any gain |
| Swap one coin for another | Capital gain or loss on the coin you gave up | A disposal, so Capital Gains Tax can apply |
| Spend crypto on goods or services | Capital gain or loss | A disposal, so Capital Gains Tax can apply |
| Get paid in crypto for work | Ordinary income at its value when received | Income Tax, and possibly National Insurance |
| Earn staking or mining rewards | Generally ordinary income when you gain control of it | Usually Income Tax, depending on the activity |
| Move crypto between your own wallets | Not taxable | Not taxable |
How it works in the US
The IRS treats digital assets as property. Each time you sell, swap or spend, you work out the gain or loss: what you received minus what you originally paid, including fees. Hold an asset for more than one year before selling and the gain is long-term, which is taxed at lower rates than short-term gains for most people.
- Report sales and swaps on Form 8949 and Schedule D.
- Answer the digital asset question near the top of Form 1040 honestly, even if you only bought and held.
- Expect a Form 1099-DA from US brokers, which reports your sales to you and the IRS.
- Crypto you receive for work or as staking rewards counts as income at its value on the day you receive it, and that value becomes your cost when you later sell.
How it works in the UK
HMRC treats most personal crypto activity as investing, so gains fall under Capital Gains Tax and are reported through Self Assessment. A few rules are specific to crypto and shares.
- Pooling. Each type of token sits in a pool, and the cost of what you sell is a share of the average cost of the pool.
- Same-day and 30-day rules. If you buy the same token on the same day you sell, or within 30 days after, the sale is matched with those purchases first rather than with your pool.
- Gifts to a spouse or civil partner. These don't usually trigger a gain.
- Income. Crypto received from an employer, or from mining and some staking, is generally taxed as income.
If you trade so often that it looks like a business, HMRC may treat profits as trading income instead. That's rare for individuals, but worth raising with an accountant if you're very active.
If your business takes crypto
If customers pay you in crypto, record the value in your own currency on the day you receive it. That's your sales income. If you hold the crypto and sell it later, any change in value is a separate gain or loss. Prices can move a lot between the day you're paid and the day you sell, which is why many businesses convert crypto payments to cash straight away to keep the books simple. My explainer on why crypto crashes covers what drives those swings.
Records to keep
- The date of every buy, sell, swap, spend and transfer.
- What you paid or received, in your own currency, at the time.
- Fees on each transaction.
- Wallet addresses and which ones are yours.
- Exchange statements and downloads, saved before an exchange closes or changes its export tools.
Crypto tax tools can pull this data from exchanges and wallets and produce reports for your return. Many of the best crypto apps offer exports that these tools read. Keep receipts for anything you bought with crypto too. A receipt scanner app makes that painless.
Common mistakes
- Thinking swaps between coins aren't taxable until you cash out. They usually are.
- Losing track of cost because an exchange shut down. Download your history regularly.
- Forgetting small spends. Each one is a disposal.
- Ignoring losses. In both countries, losses can usually be set against gains, but only if you report them.
When to get an accountant involved
Simple buy-and-sell activity on one exchange is often manageable yourself with a crypto tax tool. Bring in an accountant who knows crypto if you use DeFi lending or liquidity pools, receive tokens from airdrops or forks, trade across many exchanges and wallets, run a business that holds crypto, or have years of activity you haven't reported. These are the areas where the rules are least settled and where a wrong guess costs the most.
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Exchanges are reporting more
Tax authorities in both countries now receive more data directly from exchanges and brokers. If you've missed reporting in past years, HMRC and the IRS both have routes for putting it right, and doing it before they contact you is usually far better than after.
Frequently asked questions
How is crypto taxed?
In both the US and the UK, crypto is treated as property. Selling, swapping or spending it can create a taxable gain, and crypto received as pay or rewards is usually taxed as income.
Do I pay tax if I don't sell my crypto?
Buying and holding isn't taxed. But swapping one coin for another or spending crypto usually counts as a disposal, even if you never convert to cash.
Is moving crypto between my own wallets taxable?
No. Transfers between wallets you own aren't disposals. Keep records showing both wallets are yours.
Are crypto losses tax deductible?
In both countries, losses can usually be set against gains if you report them. Keep records of what you paid and what you received.
Does HMRC know about my crypto?
HMRC can request data from exchanges and receives more information through international reporting rules, so it's safest to assume your activity is visible.
