How to Report Crypto Gains to HMRC (Complete Guide for 2025)

 

1. Yes, You Really Do Need to Pay Crypto Taxes

Let's get this straight upfront HMRC absolutely expects you to pay taxes on your crypto profits. I know it's tempting to think "it's just internet money", but the taxman disagrees. Every time you cash out, trade coins, or even spend crypto, you could be creating a tax bill. The good news? It's not as scary as it seems if you understand the rules.

2. When Do You Owe Taxes on Crypto?

You'll owe taxes when you:

• Convert crypto back to pounds

• Swap one coin for another (yes, even BTC to ETH counts)

• Use crypto to buy things (that new laptop paid with Bitcoin? Taxable)

• Earn free crypto from staking or airdrops

But here's some relief simply holding crypto or transferring between your own wallets doesn't trigger taxes. Phew!

3. Capital Gains Tax - The Big One for Most Traders

This is what catches most people out. If you sell crypto for more than you paid, that's a capital gain. For 2024/25:

• First £3,000 profit is tax-free (this allowance dropped from £6,000)

• Beyond that, you pay either 10% or 20% tax depending on your income level

Pro tip: Always calculate your original cost in pounds not dollars or crypto terms.

4. When Crypto Becomes Income (Not Just Investment)

Some crypto activities count as income from day one:

• Getting paid in crypto (your salary in Bitcoin? That's income)

• Mining rewards (HMRC treats this like self-employment)

• Staking rewards (taxable when received, not when sold)

• Crypto interest from lending platforms

These get added to your normal income and taxed at 20-45%. Ouch!

5. Doing the Maths (Without Losing Your Mind)

Here's how to work it out:

1. Note every purchase price in GBP (yes, even that 2017 Bitcoin buy)

2. Track every sale/disposal in GBP

3. Use the FIFO method (oldest coins sold first) unless you specify otherwise

4. Deduct any fees from your gains

Honestly? Use an crypto tax spreadsheet or software unless you have only a few transactions.

6. Reporting Crypto to HMRC (Step-by-Step)

If your gains exceed £3,000:

1. Register for Self Assessment by October after the tax year ends

2. Fill in the SA100 form plus the capital gains supplement (SA108)

3. Have your records ready dates, amounts, GBP values

4. Pay by January 31st (with a payment on account if needed)

7. Common Screw-Ups to Avoid

• "I didn't know" isn't an excuse HMRC accepts

• Forgetting that crypto-to-crypto trades count

• Losing records (keep them for 6 years!)

• Missing the January deadline (penalties add up fast)

• Not using the right GBP exchange rates for each transaction

Final Pro Tips

• HMRC gets data from UK exchanges they will know if you've been trading

• Consider using tax software like Koinly or CoinTracker worth every penny

• If you're in deep, get an accountant who understands crypto

• The rules keep changing check HMRC's crypto manual for updates

Remember: Paying crypto tax properly means you can sleep easy knowing you won't get nasty surprises later. And let's be honest if you made enough profit to owe tax, that's actually a good problem to have!