Do YOU need to declare your crypto gains to the taxman this week?

The price of crypto has boomed in recent times, with President Trump throwing his weight behind the digital assets, promising to loosen regulation in the US and replace anti-crypto SEC Chair Gary Gensler ahead of the US election.

Following Trump’s win in November, crypto was riding high, with bitcoin in particular surging to record heights.

The so-called ‘Trump trade’ saw millions jump on the crypto train hoping to see the value of their tokens rise.

Some of that has fallen back, with the price today sitting below $100,000 a coin after recently flirting with $108,000. But even so, the price in the summer dipped as low as $54,000.  

Around 7million Britons owned crypto assets back in August according to the Financial Conduct Authority.

With Trump now in the White House, and US crypto legislation set to shift, the future could be bright for the digital tokens. As a result, the number staking their money on crypto could be set to rise in 2025.

But it’s likely many are under the impression that investing their money in this way hides them from a tax liability.

This is Money explains below how you might find yourself owing tax if you have crypto holdings.

How do new CGT rules affect crypto?

Crypto has always been subject to capital gains tax, but with new rules having been implemented in the Autumn Budget, those holding crypto assets now have increased tax liability.

The basic rate of capital gains tax, paid by those earning up to £50,270 has been increased to 18 per cent from a previous 10 per cent, while the higher rate, paid by those earning more than £50,270 as well as additional rate taxpayers who earn over £125,140, has been upped from a previous 20 per cent to 24 per cent.

Regardless of the CGT rate you are liable for, everyone has a £3,000 annual capital gains allowance.

If you jointly own assets with another person, you can make use of a total £6,000 annual allowance.

Britons also have a £20,000 Isa allowance which is normally used to protect investments from tax liability, but crypto gains cannot be held within an Isa wrapper.

Exchanging tokens for a different cryptocurrency is considered to be the act of selling one currency and buying another, and is therefore also deemed to be a disposal, meaning that you will have to report any gains on these transactions.

If the token remains the same throughout, and is simply moved between wallets, then there is no tax liability on this.

How to file your self-assessment if you invest in crypto

If your crypto gains go above your annual allowance, you’ll need to complete a self-assessment tax return. For the tax year that ended in April 2024, the deadline to do so fast-approaching.

Tax returns must be filed by midnight on 31 January. If you haven’t registered for self-assessment and you need to do so the deadline has already passed.

For the current tax year ending in April, however, you must register for self assessment by 5 October, before filing a tax return at the end of January 2026.

If you are filing a tax return, you will need to report any gain you make from your crypto assets. 

However, it is worth noting that you can offset your gains against your losses, which could help to reduce your CGT bill.

In order to ensure you can properly report your gains or losses, it is essential to keep a record of your transactions.

This means you need to calculate your gain for each transaction you make, generally the difference between what you paid for them, including transaction costs, and what you sold the assets for.

You need to do this for every crypto disposal during the tax year to calculate your net gain or loss.

The value of these gains must be calculated in pound sterling rather than US dollars. You can also deduct some costs from your gain.

According to HMRC, these can include transaction costs, the cost of advertising for a buyer or seller, contract costs and costs of valuing your crypto assets.

When calculating your liability, HMRC allows you to pool transactions per type of token to simplify your tax calculations, however there are check in place to prevent manipulation aimed at reduce tax liability.

HRMC last year sent nudge letters to those it suspected of not paying CGT on their crypto gains, warning of penalties on top of tax due in a crypto crackdown.  

Can you be liable for IHT and income tax on crypto?

For most, CGT is the only levy they can expect to face relating to their crypto holdings.

However, income tax can also be owed on crypto tokens if you have received them.

Some employers may choose to give crypto assets that can be easily exchanged for real currency as a form of payment. If so, they should account for income tax and National Insurance and remove this from your wages.

Sometimes the assets can’t be exchanged for cash easily, in which case you will be responsible for paying the necessary tax.

You can also pay income tax on crypto gains you make from staking – that is, putting your crypto on a blockchain network to help improve its performance, which rewards you with more of the currency you have staked.

Staked crypto income is classed as miscellaneous income and should be reported in a self-assessment tax return.

Crypto assets gained from ‘mining’ – essentially verifying crypto transactions and creating new coins through the use of computer processing power – is also treated as income. This can be either trading income or miscellaneous income, depending on the nature of the mining operation.

If your income from mining is less than £1,000 per year, there is no tax liability on your earnings.

Can you gift crypto?

Cryptoassets can be given as gifts, but you might be liable to pay tax on them. 

If you make the gift to your spouse or civil partner, then the good news is that it will be free of tax. This can allow you to double your tax-free allowance each year by making use of your partner’s £3,000 allowance.

However, if you are gifting crypto to someone other than your spouse, such as a friend, you will have to calculate the value of the tokens as this is classed as a disposal, and any gains with be subject to CGT.

Notably, the tax you pay on these gains can be reduced by any amount in income tax that you have already paid on the tokens you are gifting.

The tax rules also mean that you can gift crypto assets to a registered charity without paying income tax or capital gains tax.