Cryptocurrency: An update on the UK position

17 April 2026

Last updated: 20 April 2026

Katie Close CA
Director of Tax, ICAS

As HMRC launch its calls for views on the taxation of stablecoins, Director of Tax, Katie Close CA CTA, takes a look at the current landscape of cryptocurrency in the UK.

Cryptoassets have moved rapidly from the margins of financial activity into the mainstream. Millions of UK taxpayers are now estimated to hold some form of cryptoasset, and businesses across a range of sectors increasingly interact with blockchain based arrangements.

As usage has expanded, so too has the need for clarity on tax treatment. In the UK, this clarity has developed incrementally, largely through HMRC guidance rather than detailed primary legislation, resulting in a framework that continues to evolve. With so many people and businesses now using cryptocurrency in some form, HMRC is stepping up its efforts around compliance and reporting.

Below we consider the current UK tax position for cryptoassets, highlight areas of complexity and uncertainty, and explore the direction of travel for policy and administration.

Common types of cryptoassets

Cryptoassets (also known as cryptocurrency or tokens) are digital assets that rely on some form of Distributed Ledger Technology (DLT).

DLT records transactions in multiple places at the same time, with no central data store like traditional databases. Blockchain is a type of DLT, where the information is stored in chained blocks using cryptography to keep it secure.

There are four main types of cryptoasset:

Payment cryptocurrencies: Acts as digital money that can be used to pay for goods and services. The most commonly known is Bitcoin.
Utility tokens: Used to exchange for a service or good on a particular platform or blockchain. These are usually issued by a business who will then accept them for the good or service they provide. Ether is a type of utility token.
Security tokens: Provide digital ownership in assets or rights to a business, such as equity, future profit share or bonds. tZero is a common security token.
Stablecoins: A type of cryptocurrency linked to something with a stable value, such as fiat currency (e.g. USD) or commodities.

Current tax treatment

A defining characteristic of the UK tax regime is that cryptoassets are not treated as currency or money for tax purposes.

HMRC regards most commonly encountered cryptoassets, such as Bitcoin and Ether, as a form of property. Instead of a bespoke crypto-specific regime, HMRC applies the existing tax rules for property to cryptocurrencies.

HMRC’s views are set out in the Cryptoassets Manual, covering individuals, businesses and decentralised finance (DeFi). While the manual does not have the force of law, it is the primary reference point for advisers and is increasingly relied upon in compliance activity. Importantly, HMRC has made clear that the guidance may continue to develop as markets and technology evolve.

In practice, the tax consequences of cryptoasset activity typically fall within one of two broad regimes:

Capital Gains Tax (CGT): Where cryptoassets are held as investments.
Income Tax or Corporation Tax: Where cryptoassets are received as income or form part of a trading activity.

As with other emerging areas, applying familiar concepts to unfamiliar arrangements often presents challenges.

Capital Gains Tax

For individuals, CGT arises when they dispose of cryptoassets. Disposal doesn’t just mean selling them for sterling or other fiat currency – it also includes:

Exchanging one cryptoasset for another
Using cryptoassets to pay for goods or services
Gifting cryptoassets (other than to a spouse or civil partner)

Standard CGT principles apply to the disposal. Cryptoassets of the same type must be pooled under section 104, with the sterling cost basis averaged (except for Non-Fungible Tokens which are not pooled/matched). The same-day and 30‑day matching rules apply in the usual way, adding further computational complexity.

A significant practical issue is that many taxpayers don’t recognise crypto‑to‑crypto swaps, or transfers embedded in platform activity, as disposals. This has resulted in widespread historic non‑compliance, now increasingly visible to HMRC as data access improves.

The reduction of the annual exempt amount in recent years has further increased the number of individuals required to report crypto gains, even where the sterling values involved are relatively modest.

If an individual was buying and selling cryptoassets with such frequency and level of organisation that it amounted to a trade, then this would be subject to income tax rather than CGT. The test of whether such an activity would amount to a trade (rather than an investment) would be based on existing guidance around trade in shares or other financial products.

Income tax

Income tax, along with National Insurance, will apply to cryptoassets where they are received as employment income.

Cryptoassets like Bitcoin will be treated as Readily Convertible Assets (RCAs) if they can be easily exchanged for money on token exchanges. If cryptoassets are provided as RCAs, then the employer must account for the tax and National Insurance contributions to HMRC, based on the best estimate of the value of the asset. Future disposals of RCAs may also attract CGT.

Cryptoassets received from mining (verifying additions to the blockchain digital ledger), staking (validation activity), or in some circumstances, from airdrops (free tokens) will be subject to income tax as miscellaneous income.

The taxable value is considered by HMRC to be the sterling market value at the time of receipt, minus any allowable expenses.

VAT

The VAT treatment of cryptoassets generally follows established case law.

Exchange of cryptoassets for fiat currency is treated as exempt (under the financial transactions exemption), but complexities arise where it’s used as payment for goods or services. In this case, the value of the good or service is considered to be the sterling value at the time of the transaction.

Cryptoasset Disclosure Facility

HMRC’s cryptoasset disclosure facility allows individuals to correct past errors voluntarily and unprompted. This is particularly useful for taxpayers who have been unaware that historic transactions qualified as disposals for CGT or should have been subject to income tax. However, as the calculations can be complex, it’s advisable that specialist tax advice is sought before making a disclosure.

Learn more about the Cryptoasset Disclosure Facility and how to use the service.

Cryptoasset Reporting Framework (CARF)

From 1 January 2026, the UK is applying the global Cryptoasset Reporting Framework (CARF), meaning that UK cryptoasset service providers must report on customer identity information, tax residency and transactions. This information will be exchanged with 47 jurisdictions who have all signed up to CARF.

Along with the new cryptoasset section on the self-assessment tax return, CARF means that HMRC has greater insight into cryptoasset transactions and is better able to identify cases of underreporting of cryptoassets. However, it won’t provide HMRC with the information to calculate the tax due. This would require data on acquisition costs and allowable expenses.

Financial Conduct Authority regulation

A new financial services regulatory regime for cryptoassets is expected to come into effect in late 2027.

Firms carrying on activities within the scope of the regulatory framework in the UK or for UK consumers will be regulated by the Financial Conduct Authority (FCA).

The crypto roadmap gives a high-level overview of the timeline to implementation, with the relevant rules and guidance expected to be issued before the end of 2026.

Stablecoin consultation

HMRC opened the call for evidence on the taxation of stablecoins on 26 March. It’s seeking views on the tax treatment of stablecoins as well as any administrative burdens this might cause.

The government would like to hear from investors, professionals and firms that use stablecoins, including: