Cryptocurrency Tax Rates UK: Complete Breakdown 2023

Wondering how much tax you’ll pay on your cryptocurrency in the UK? 

In this guide, we’ll break down the UK’s tax rates on cryptocurrency income and capital gains. We’ll also cover a few simple strategies to help you reduce your tax bill! 

How is cryptocurrency taxed in the UK? 

Cryptocurrency is subject to income and capital gains tax. 

For more information, check out our guide to how cryptocurrency is taxed in the UK. 

Crypto capital gains tax bands in the UK

When you dispose of cryptocurrency, you’ll recognize a capital gain or loss based on how the price of your crypto has changed since you originally received it. 

How much tax you pay on your cryptocurrency capital gains varies depending on your income for the year. 

UK capital gains tax allowance 

Every UK taxpayer gets an Annual Exempt Amount of £12,300 of capital gains. 

That means that if you make less than £12,300 in capital gains, you won’t be subject to capital gains tax. If you make more than £12,300 in gains, you’ll only be taxed on your profits above the Annual Exempt Amount. 

It’s important to remember that the Annual Exempt Amount will be cut significantly in the years to come. It’s scheduled to fall to £6,000 in April 2023 and £3,000 in April 2024. 

Crypto income tax bands 

When you earn cryptocurrency through means such as staking or mining, you’ll recognize income based on the fair market value of your crypto at the time of receipt. 

If you live in England, Wales, or Northern Ireland, you’ll pay the following tax rates on your income from cryptocurrency and other sources. 

Scottish income tax bands 

If you reside in Scotland, you’ll pay the Scottish income tax bands. 

How do tax bands work? 

It’s important to remember that you won’t pay a flat tax on all of your income. Instead, you’ll pay progressively higher tax rates as you progress through different income brackets. 

To better understand how this works, let’s take a look at how a taxpayer who’s earned £60,000 while residing in England. 

UK Income tax allowance 

For most taxpayers, the first £12,570 of income that you earn is completely tax-free! 

This tax-free allowance is not available for taxpayers who make more than £125,140 in annual income. 

How to avoid crypto tax in the UK 

While there’s no way to legally evade cryptocurrency taxes, the following strategies can help you legally reduce your tax liability

• Take profits in a low-income year: The lower your income, the lower the taxes you’ll pay on cryptocurrency disposals. As a result, some investors choose to dispose of crypto in years where their income is low. 
• Harvest crypto losses: Cryptocurrency losses can offset gains from crypto, stocks, and other assets! 
• Gift crypto to a partner: In the UK, gifting crypto to a spouse/civil partner is completely tax-free! 

For more tips and tricks, check out our complete guide on how to legally avoid crypto tax in the UK.