Are concerns about how Capital Gains Tax affects Bitcoin holdings preventing clear financial decisions? This guide explains when Bitcoin disposals attract CGT, how to calculate gains step‑by‑step, what records HMRC expects and which legal planning options reduce tax exposure.
The content focuses exclusively on Capital Gains Tax for Bitcoin in England and is aligned with HMRC guidance and up‑to‑date 2026 thresholds.
Key takeaways: what to know in one minute
- Bitcoin disposals are generally subject to Capital Gains Tax when there is a chargeable disposal (sale, exchange, spending, gifting to non‑spouse) and a taxable gain arises.
- Use the annual exempt amount to shelter gains each tax year; unused allowance is lost.
- HMRC uses matching, same‑day and 30‑day rules plus pooling for disposals — this affects the allowable base cost for each disposal.
- Record keeping is critical: dates, amounts, counterparty, exchange, wallets and fees must be retained for at least 5 years after the return filing deadline.
- Practical planning options include loss harvesting, spouse transfers and timing disposals; each has legal limits and anti‑avoidance considerations.
When Bitcoin attracts Capital Gains Tax in the UK
Bitcoin will attract Capital Gains Tax where there is a chargeable disposal by an individual or trustee and a resultant gain. Chargeable disposals include:
- disposing of Bitcoin for fiat currency (e.g. selling BTC for GBP);
- exchanging Bitcoin for another cryptoasset (crypto‑to‑crypto) — this is a disposal for CGT purposes;
- using Bitcoin to pay for goods or services (spending BTC);
- gifting Bitcoin to someone other than a spouse/civil partner (except certain exempt transfers);
- transferring Bitcoin in return for other property or services.
Exceptions and clarifications:
- Transfers between spouses or civil partners are treated as no gain/no loss for CGT when both are UK residents, meaning the recipient takes the transfer value for future disposals.
- Mining, staking rewards and airdrops may be taxed as income first (income tax/NICs) and then later attract CGT on disposal of the received coins if they rise in value; the tax treatment depends on facts and HMRC guidance. For official guidance consult HMRC: Tax on cryptoassets.
How HMRC defines a disposal and the matching rules that affect Bitcoin
HMRC requires specific rules for matching acquisitions and disposals to prevent taxpayers cherry‑picking cheap lots. For individuals the sequence is:
- Same‑day rule: acquisitions and disposals on the same calendar day are matched first.
- Bed and breakfast / 30‑day rule: acquisitions within 30 days after the disposal are matched next (prevents selling and repurchasing to obtain favourable pooling).
- Section 104 pooling: all other acquisitions are pooled and the pool gives an average cost per unit.
This sequence affects the calculation of allowable costs and therefore the gain. For precise HMRC reference see HMRC Capital Gains Manual.
How matching changes the base cost: a short example
- Buy 1 BTC on 1 March for £10,000.
- Sell 0.5 BTC on 2 March for £7,000. If there was a same‑day buy of 0.5 BTC on 2 March the same‑day rule may apply; otherwise the sale will drain the section 104 pool at average cost.
Calculating CGT on Bitcoin disposals: practical examples
The tax calculation follows a simple formula: taxable gain = proceeds (net of selling fees) − allowable costs (acquisition cost, transaction fees, apportioned costs). Then apply reliefs and allowances.
Key steps:
- Determine whether the event is a disposal.
- Establish the disposal proceeds in GBP at the time of disposal (use a reliable exchange rate).
- Match the disposal to acquisitions under same‑day, 30‑day, then pool rules to get allowable base cost.
- Deduct allowable costs (transaction fees, exchange fees) from proceeds and/or add to base cost where appropriate.
- Apply the annual exempt amount and any reliefs.
- Apply the CGT rate depending on taxable income and whether the asset is residential property or other gains (Bitcoin is treated as other assets): 10% (basic rate) or 20% (higher/additional rate) for gains after 2023 changes remain subject to income banding rules.
Worked example 1: single sale using pooling
- Acquisition history: 1 BTC bought 01/02/2020 at £7,000; 0.5 BTC bought 01/08/2021 at £15,000 (total pool cost £22,000 for 1.5 BTC; average cost = £14,666.67 per BTC).
- Disposal: 0.6 BTC sold 15/06/2025 for £30,000 (pro rata from pool: cost = 0.6 × £14,666.67 = £8,800).
- Gain before allowance: £30,000 − £8,800 − selling fees (assume £200) = £21,000 approximately.
- Annual exempt amount 2025/26 (example) assumed £6,000 — taxable gain = £15,000.
- If taxpayer’s taxable income puts them in the higher rate band, CGT at 20% = £3,000.
Worked example 2: crypto‑to‑crypto swap (Bitcoin to Ethereum)
- 0.5 BTC bought for £10,000 on 01/03/2023. On 10/10/2024 0.5 BTC exchanged for 12 ETH valued at £25,000 at the time.
- This exchange is a disposal of BTC with proceeds £25,000. Cost basis £10,000. Gain £15,000, treated as CGT disposal.
- Later disposal of those ETH triggers further CGT calculations based on the £25,000 cost base for ETH.
Example illustrating same‑day and 30‑day rules
- Sell 1 BTC on 1 March 2026 and repurchase 0.5 BTC on 1 March 2026 (same day) and 0.4 BTC on 20 March 2026 (within 30 days). The sale will match the same‑day purchases first, then 30‑day repurchases, before draining the pool.
Using annual allowance and loss relief for crypto
Annual exempt amount: each individual has an annual exempt amount that shelters gains each tax year. Unused allowance does not carry forward.
Loss relief: capital losses from Bitcoin disposals can be set against capital gains in the same tax year first. If losses exceed gains they can be reported and carried forward to offset future capital gains (must be reported within the deadlines).
Practical application:
- If total gains in the year are £12,000 and the annual exempt amount is £6,000, taxable gain is £6,000.
- If losses of £4,000 exist, they reduce taxable gains to £2,000.
Reporting deadlines and claims:
- Losses should be registered with HMRC on the Self Assessment or by writing to HMRC within 4 years of the end of the tax year in which the loss arose to preserve the right to offset.
How HMRC treats crypto‑to‑crypto and income events
Crypto‑to‑crypto is a disposal for CGT. The value for proceeds is the market value in GBP at the time of exchange. That becomes the acquisition cost for the receiving crypto.
Income events (mining, staking, some airdrops) may be taxable as income when the asset is received if HMRC considers it trading income or miscellaneous income. The amount taxable as income is the market value in GBP when received; subsequent disposal triggers CGT using that value as the acquisition cost.
Examples of income events:
- Mining rewards received in BTC where activity meets HMRC indicators of trading or rewards for services.
- Staking rewards where the taxpayer receives new cryptoassets as a reward; HMRC has stated such rewards will often be income taxable.
For official HMRC positions link to HMRC: tax on cryptoassets.
Record‑keeping and reporting Bitcoin gains to HMRC
Records that should be kept for every transaction:
- Date and time of disposal/acquisition;
- Type and amount of cryptoasset (e.g. 0.345 BTC);
- Value in GBP at the time of transaction and the exchange/source used for conversion;
- What the transaction was (sale, exchange, gift, spending);
- Who the counterparty was (exchange, wallet address or individual) and transaction IDs;
- Transaction and network fees and how they were calculated.
Retention period: keep these records for at least 5 years after the 31 January following the tax year in which the disposal took place (longer for complex cases).
Reporting in Self Assessment:
- If the total gains in a tax year are above the annual exempt amount, register for and file a Self Assessment return and declare the gain in the capital gains section.
- For gains below the threshold but if there is tax due because of higher rate thresholds or other reasons, a return may still be required.
Practical guidance on boxes and forms:
- Use the Capital Gains summary pages (SA108) to report crypto gains. Fill in the disposal date, description, proceeds (in GBP), allowable costs and any losses being claimed. If unsure which box, consult HMRC guidance or a tax adviser.
Tax planning strategies to minimise CGT on Bitcoin (legal and practical)
Strategies must be legal, documented and aligned with HMRC guidance. The following are legitimate approaches commonly used by taxpayers.
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Loss harvesting: realise losses in the same tax year to offset gains. Ensure matching rules and 30‑day acquisitions are considered to avoid unintentional matching.
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Use the annual exempt amount efficiently: timing disposals across tax years may spread gains and use multiple years’ allowances. Remember the allowance cannot be carried forward.
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Transfer to spouse/civil partner: transfers between spouses are no gain/no loss; the recipient may later dispose when in a lower tax band, reducing CGT. Consider marital status and anti‑avoidance rules.
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Timing with income: CGT rates depend on taxable income. Where possible, arrange disposals in years with lower taxable income to benefit from the 10% rate band for other gains.
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Consider using pensions/ISAs where possible: currently, crypto cannot be held directly in ISAs, but using tax‑efficient wrappers for other investments can reduce taxable income and the overall tax position.
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Avoid contrived arrangements: HMRC applies anti‑avoidance rules to schemes designed solely to avoid tax and will challenge transactions lacking commercial substance.
Comparative table: taxable events and typical HMRC treatment
| Event |
Tax treatment |
Notes |
| Sell BTC for GBP |
CGT on gain |
Proceeds converted to GBP at date of sale |
| Exchange BTC for ETH |
CGT on BTC disposal; new cost = value of ETH received |
Crypto‑to‑crypto is a disposal |
| Spend BTC at merchant |
CGT on disposal |
Value for proceeds = market value at payment time |
| Receive BTC from mining/staking |
Likely income tax first, then CGT on disposal |
Depends on facts; consult HMRC guidance |
Bitcoin CGT process at a glance
🔍 **Step 1** → Confirm whether the event is a disposal (sale, exchange, spend)
📥 **Step 2** → Convert proceeds and costs to GBP at transaction time
🧾 **Step 3** → Apply same‑day, 30‑day then pooling rules to determine base cost
➖ **Step 4** → Deduct allowable costs and apply annual exempt amount
💷 **Step 5** → Report on Self Assessment (SA108) if taxable gain exists
Advantages, risks and common errors
✅ Benefits / when to apply
- Harvest losses in years with large gains to reduce tax payable.
- Spread disposals across tax years to use multiple annual exemptions.
- Transfer to spouse when appropriate to make use of different tax bands.
⚠️ Errors to avoid / risks
- Poor records: inability to prove dates, amounts or conversion rates can lead to HMRC adjustments.
- Ignoring matching rules: incorrectly assuming FIFO may cause under‑ or over‑statement of gains.
- Assuming transfers to own wallets are non‑taxable: moving between wallets owned by the same person usually is not a disposal, but evidence is needed to show ownership; transfers to custodial exchanges can create taxable events depending on circumstances.
Questions frequently asked
What counts as a disposal for Bitcoin?
A disposal includes sales for fiat, exchanges for other crypto, spending Bitcoin, and gifting to non‑spouses. Transfers between spouses are generally no gain/no loss.
How is the GBP value of Bitcoin determined for tax?
Use a reliable market rate at the time of the transaction; maintain the source (exchange and timestamp). HMRC expects a reasonable, consistently applied method.
Can crypto‑to‑crypto trades avoid CGT?
No. Crypto‑to‑crypto trades are chargeable disposals, with proceeds valued in GBP at the time of the exchange.
How long should records be kept for HMRC?
Keep transaction records for at least 5 years after the 31 January submission deadline following the tax year of disposal; longer for complex cases.
Are mining rewards subject to CGT?
Mining rewards are more likely to be taxable as income when received and then subject to CGT when disposed, depending on facts. Consult HMRC guidance or a tax adviser.
What is the 30‑day rule and why does it matter?
The 30‑day rule matches acquisitions made within 30 days after a disposal to that disposal, preventing quick sell‑and‑repurchase to manipulate pooling.
How are losses on Bitcoin reported?
Report losses on the Self Assessment and claim them against gains in the same tax year; unrelieved losses can be carried forward if registered with HMRC.
Your next step:
- Calculate provisional gains for the current tax year using transaction records and determine whether the annual exempt amount will be exceeded.
- Collate and secure all transaction records (dates, amounts, GBP conversions, exchange/wallet references) in a spreadsheet or tax tool.
- If gains are likely or complex, prepare an SA108 entry or contact a specialist tax adviser and reference HMRC guidance at HMRC: tax on cryptoassets.