Cryptocurrency Accounting

Yes. HMRC treats crypto as an asset. You may owe Capital Gains Tax when you sell, swap, or spend crypto, or Income Tax if you receive it through mining, staking, or as payment for services.

A taxable event occurs when you dispose of crypto - selling for cash, exchanging for another coin, gifting it (unless to a spouse), or using it to pay for goods or services.

Crypto isn’t recognised as currency. HMRC treats it as a capital asset, similar to shares, meaning profits are subject to Capital Gains Tax.

Mining and staking – taxed as income when received.

Airdrops – taxable if received in exchange for a service.

Crypto payments – treated as employment or trading income.

NFTs are generally subject to Capital Gains Tax when sold or exchanged. DeFi transactions (like lending, liquidity pooling, or yield farming) may trigger taxable events depending on ownership and interest earned.

You calculate gains by subtracting the cost basis (what you paid, including fees) from the value at disposal. HMRC uses the share pooling method to average acquisition costs across similar tokens.

Most individuals are treated as investors, not traders. However, if trading is frequent and structured like a business, HMRC may classify you as self-employed, meaning Income Tax rules apply.

Yes. You can report and carry forward capital losses to offset future crypto or other investment gains, provided you claim them within four years of the loss.

If access is permanently lost (e.g., lost keys or an exchange collapse), you may claim negligible value relief to recognise the asset as disposed of and record a loss.

Maintain detailed transaction records including wallet addresses, transaction dates, GBP values, and fees. These records must be kept for at least six years.

Yes. Limited companies must include crypto transactions in their Corporation Tax Returns, paying tax on realised profits or capital gains.

UK tax applies to worldwide crypto activity. HMRC can access data from major global exchanges under international reporting agreements.

Failing to declare can result in penalties, backdated tax, and interest charges. HMRC’s “nudge letters” campaign already targets undeclared crypto activity.