Key Takeaways
- Starting on October 30, 2024, crypto disposals will be taxed between 18-24%.
- Most taxpayers have a £3,000 allowance on capital gains and a £12,570 allowance on income.
Wondering how much tax you’ll pay on 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.
When is crypto subject to capital gains tax?: You pay capital gains tax on crypto when you dispose of it — for example, when you sell crypto or trade it away.
When is crypto subject to income tax: You pay income tax on crypto when you earn it — for example, when you receive crypto as staking or mining rewards.
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.
Capital gains tax rates are rising. Any cryptocurrency disposals after October 30, 2024 will be subject to the following tax rates.
UK capital gains tax allowance
In the 2024-2025 tax year, every UK taxpayer has an Annual Exempt Amount of £3,000 of capital gains.
This allowance has been steadily shrinking in recent years. In 2023-2024, the Annual Exempt Amount was £6.000. In preceding years, the Annual Exempt Amount was £12,300.
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.
In addition, you have £1,000 in tax-free allowances for property or trading income. Income from cryptocurrency falls into this category. If your total property income from the year is less than £1,000, there is no need to report it to the HMRC.
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.
As you can see, each portion of income is taxed at a different rate.
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.
How to calculate your UK crypto taxes in minutes
Looking for an easy way to calculate your crypto taxes? Try CoinLedger — the crypto tax software trusted by 500,000 investors across the globe and in the UK.
Simply connect your wallets and exchanges and CoinLedger will calculate your tax bill for you!
Once you’re done, you can export your crypto tax report to your tax platform of choice or send it off to your accountant!
Frequently asked questions
- What percent tax do you pay on crypto?
- Does crypto count as property in the UK?
- Does Coinbase report to the HMRC?
- Do I have to pay tax on crypto if I reinvest?
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