With the rapid rise of cryptocurrency as both an investment vehicle and a form of payment, more individuals than ever are dipping their toes into digital assets like Bitcoin, Ethereum, and beyond. But while the potential for high returns has captured the imagination of many, the tax implications are often misunderstood – or overlooked entirely.
HMRC has taken a clear and increasingly assertive stance on the taxation of cryptoassets. Whether you’re trading, mining, receiving crypto as payment, or simply holding it as a long-term investment, the chances are you’ll have a tax liability of some kind. Failure to properly declare and account for these liabilities could result in penalties and interest charges.
In recent years, HMRC has stepped up its efforts to identify non-compliance, including working with crypto exchanges to access user data. There have also been notable updates to HMRC guidance and tax reporting requirements, particularly around capital gains, self-assessment disclosures, and the treatment of crypto-related income. Understanding how these rules apply to your specific circumstances is more important than ever.
To help demystify this evolving area, the HaysMac Tax Disputes and Resolutions team has compiled answers to some of the most frequently asked questions we receive from clients navigating the tax challenges of cryptocurrency held as a personal investment.
My crypto gains have never exceeded the CGT exemption. Do I still have to report my gains to HMRC?
The CGT annual exemption for 2022/23 was £12,300 and the proceeds reporting requirement for the SA return was 4 times this (£49,200), it is worth noting the rates in prior years were lower.
For 2024/25 and 2025/26 the CGT annual exempt amount is £3,000 and if sales proceeds are more than £50,000, there is a reporting requirement.
Therefore, even if your gains were less than the CGT annual exempt amount you may still have a reporting requirement.
I haven’t sold any crypto for cash; I’ve only changed holdings, for example exchanging Bitcoin for Ethereum. Do I still owe tax?
Yes. A crypto exchange between Bitcoin and Ethereum is a taxable event and should be included in your capital gains/losses calculations.
I have only made losses. What should I do?
If you do not claim the losses with HMRC you will lose them. You ordinarily have four years from the end of the tax year in which the loss arose to make the claim for losses. For example, to claim for a loss arising in the tax year which ended on 5 April 2025 a claim would have to be made by 5 April 2029.
I haven’t withdrawn any funds from the platform/I haven’t cashed in any of my holdings for fiat currency. What’s my position?
This will not matter, gains are calculated on the transactions, not whether you have received the money.
I haven’t traded for a number of years. Do I need to declare my crypto?
It doesn’t matter, if you haven’t declared the crypto on your personal tax returns you are required to bring your filings up to date.
I have closed my account or no longer have access to my account. What should I do?
We recommend you write to the platform(s) you previously used to obtain details of your transactions. If you made gains or had sales proceeds exceeding the reporting thresholds you have a duty to report them.
I haven’t heard from HMRC in relation to my crypto. Do I need to do anything?
If you haven’t heard from HMRC in relation to crypto, have traded in crypto and haven’t reported to HMRC, we recommend for you to review your capital gains/loss position to ascertain if you have a filing requirement. Approaching HMRC before they approach you provides lower penalties, thus a cash incentive for you to act quickly.
Should you find an error, a voluntary disclosure can be made to HMRC. We recommend you contact a professional adviser, as they have detailed knowledge of the legislation and HMRC’s practices thus providing you with clear guidance on the action required.
What next?
These cover the questions most UK crypto holders ask us when trying to stay on the right side of HMRC. If you’re unsure how the rules apply to your specific situation, it’s always best to seek professional tax advice.
At HaysMac, we have a deep understanding of crypto transactions and HMRC’s approach to taxation, and we have a proven track record in guiding our clients through challenging situations and obtaining the most favourable outcome possible. If you have received a letter from HMRC or have any concerns over your crypto transactions please contact Danielle Ford, Head of Tax Disputes and Resolutions, or Riocard Hoye, Senior Manager.
