Cryptocurrency, or crypto for short, offers exciting new ways to invest in and grow wealth. However, investors need to grasp the basics of the technology, use reputable trading platforms, adhere to UK-specific tax obligations, and build sound investment strategies. See more

When do you pay tax on cryptocurrency?

When you sell, trade or gift crypto in the UK, you’re likely to pay Capital Gains Tax (CGT) on any profit. This is because HMRC sees crypto as personal property and as such it is taxed as either income or a capital asset.

There are some exceptions though. For example, you don’t pay CGT when you move your crypto between wallets that you own – think of it like moving fiat currency between bank accounts. You also don’t pay tax when you transfer your crypto to a DeFi protocol, such as for mining or staking returns.

In addition, if you gift crypto to another individual in the UK, such as your spouse or civil partner, it’s completely tax free. This can let you take advantage of each person’s own annual tax-free CGT allowance and potentially a lower Income Tax band – reducing your overall Capital Gains Tax bill.

Similarly, donating your crypto to charity is totally tax free in the UK. However, you should always seek advice from a professional about how this might impact your overall Capital Gains Tax position.