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Is the reader worried about how to treat contributions in crypto to a crowdfunding campaign for tax purposes? Clear rules exist but the outcome depends on roles, token design and what is received in return. This guide focuses exclusively on Crowdfunding via crypto tax in the UK, giving practical steps to classify receipts, record transactions and report correctly to HMRC.
Key takeaways: what to know in one minute
- Treatment depends on whether the backer is a donor, customer or investor. Classification drives whether Income Tax, VAT or Capital Gains Tax applies.
- Tokens or rewards may create income for the issuer and capital gains/income for backers. Distinguish utility tokens, pre-sales, and security-like tokens.
- HMRC expects robust record-keeping. Date, wallet addresses, fiat equivalence at time of transaction and platform fees are essential.
- Companies must consider corporation tax and VAT; individuals may owe CGT or income. Use the correct valuation method when converting crypto to GBP.
- Follow step-by-step filing procedures, keep templates and evidence, and consult a specialist if tokens resemble securities.
How HMRC treats crypto crowdfunding for tax
Crowdfunding via crypto tax is not a single familiar category in HMRC manuals; HMRC applies existing tax principles to facts. The key is the economic substance of each party's position.
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Issuer (project/company or individual) receipts in crypto are income for trading or other receipts if there is a supply of goods, services or rights. If pre-selling a product, the receipt is revenue for corporation tax or income tax depending on the entity.
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Backers who give crypto for no reward may be treated as donors; the recipient will have non-trade receipts potentially taxable. Where backers receive tokens or rewards, that exchange creates tax events for both sides.
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HMRC treats crypto as property for CGT purposes: disposals by backers (including using crypto to pay for a reward or swap for tokens) can trigger capital gains. See HMRC guidance on cryptoassets: Tax on cryptoassets.
When receipts count as trading income for the issuer
Receipts count as trading income when the project runs a business-like operation: systematic marketing, promised deliverables, ongoing activities, or where the project intends profit. For companies, such receipts are subject to corporation tax and should be recorded in statutory accounts.
When receipts are capital/other income
One-off receipts, gifts or capital contributions to founders may be non-trade receipts and treated differently for tax. Correct classification affects allowable expenses and losses.
Capital gains and income rules for token backers
Backers can be donors, customers, or investors. Tax outcomes vary.
Donor/backer who receives nothing of value
If a backer donates crypto and receives no reward or token, disposal rules still apply: transferring crypto to another wallet (including a project's wallet) is a disposal for CGT at the market value of the crypto in GBP at the time of transfer. If the donor is an individual, CGT allowances may apply.
Customer/backer receiving rewards or products
When a backer pays with crypto for a product, that is a disposal of the crypto for CGT. The backer must calculate gain or loss: proceeds equal the GBP value of what was received (the fair market value of the reward) at disposal time. Frequently, valuation uses the GBP price of the crypto at the exact timestamp.
Investor/backer receiving tokens that represent equity or profit share
If tokens confer rights akin to shares or investment returns, they may be treated as securities; the receipt may be an acquisition of an asset (no immediate income for the backer) but later disposals trigger CGT. However, if tokens are received as part of a scheme where the backer expects a return, HMRC could recharacterise benefits as income. Specialist advice advised.
Example: paying 0.5 BTC for a token reward
- Backer sells 0.5 BTC or transfers 0.5 BTC to project wallet → disposal must be reported for CGT at GBP value of 0.5 BTC at time of transfer.
- Issuer receives 0.5 BTC; if supplying goods/services, issuer records income at the GBP value of 0.5 BTC on receipt for tax purposes.
Record-keeping HMRC expects from crypto crowdfunding campaigns
HMRC requires the same level of detail for crypto as for fiat transactions. Good records reduce risk and make self-assessment straightforward.
Minimum records to keep
- Date and time of each crypto receipt or transfer (UTC or local, consistently).
- Amount and type of cryptoasset (e.g., 0.5 BTC; ERC-20 XYZ token).
- Wallet addresses (payer and recipient), and platform transaction IDs.
- GBP value at the time of the transaction and the data source for that rate (exchange name or reliable index).
- Purpose of payment (donation, pre-sale, reward, investment) and any contractual terms.
- Fees and costs charged by platforms or exchanges (these affect issuer income and backer disposal proceeds).
Recommended retention period
Retain records for at least six years as per HMRC's general document retention guidance for tax matters; longer if the project anticipates disputes or regulatory queries.
Practical templates and logs
- Use a spreadsheet or ledger that captures the above fields per transaction.
- Store copies of campaign terms, token whitepaper, KYC records (if applicable) and correspondence.
VAT, corporation tax and crowdfunding via crypto
Tax at the issuer level often involves corporation tax and VAT considerations.
Corporation tax for companies receiving crypto
Companies accepting crypto as payment should treat the GBP equivalent as taxable income when received. Accounts should record crypto receipts at fair value in GBP at the point of recognition. Subsequent movements in crypto value held after receipt are likely to be gains or losses on a separate asset (chargeable gains or taxable income depending on accounting policy and facts).
VAT on rewards and tokens
VAT applies to supplies of goods and services. If an issuer supplies a tangible product or a service in exchange for crypto, VAT treatment mirrors fiat transactions. The VAT fraction is calculated on the GBP value at the time of supply. Some specific scenarios:
- Simple reward (merchandise, access): standard VAT rules apply.
- Token that is a utility right (access to a platform feature): may be a supply of services and attract VAT.
- Token representing investment returns: likely outside VAT (financial services exemption) but careful analysis needed.
Where VAT applies, the issuer should issue invoices in GBP equivalent and account for VAT in the normal way. If the issuer is VAT-registered, ensure VAT on the supply is charged irrespective of crypto payment.
Legal risks: tokens, securities tests and regulatory compliance
Crowdfunding via crypto tax overlaps with financial regulation. Tokens that have characteristics of shares, debt or profit rights may fall within the UK Financial Services and Markets Act (FSMA) regime.
Securities test and consequences
If tokens are classified as transferable securities or give entitlement to investment returns, the issuer may require authorisation or must comply with prospectus rules. This regulatory classification also affects tax treatment: securities-like tokens often bring capital rules and anti-avoidance scrutiny.
Platforms facilitating crypto crowdfunding may have AML obligations and must keep KYC records. Issuers should anticipate demands for identity verification from platforms and funders.
When to obtain legal advice
If tokens grant governance, profit share, or resemble equity/debt, obtain legal and tax advice before launch. Misclassification risks regulatory enforcement and tax recharacterisation by HMRC.
Practical steps to file crypto crowdfunding taxes correctly
This section is a step-by-step practical checklist for typical scenarios.
Preparation: gather records
- Export transaction history from wallets and platforms including timestamps and txids.
- Convert each transaction to GBP at the time of the event using a reliable exchange rate (document source).
- Classify each transaction (donation, sale, investment).
For individual backers: reporting disposals
- Identify each disposal event (transfer, sale, exchange) linked to crowdfunding.
- Calculate gain or loss: proceeds (GBP value when disposed) minus allowable cost basis (GBP value when acquired, adjusted for pooling rules for crypto).
- Use the annual CGT allowance and report on Self Assessment if liable.
For issuers (companies)
- Recognise receipts in GBP equivalent as income when earned per accounting standards.
- Maintain VAT records and issue invoices where supplies are taxable.
- Account for corporation tax on profits; treat later appreciation of held crypto as chargeable gains or taxable income depending on circumstances.
Filing and deadlines
- Individuals use Self Assessment (31 January online) for tax due the previous year.
- Companies file corporation tax returns and pay within nine months and one day after the accounting period ends.
Example checklist to submit with Self Assessment
- Spreadsheet of crowdfunding disposals showing date, crypto type, quantity, GBP value, gain/loss calculation.
- Copy of campaign T&Cs and proof of reward delivery.
- Exchange/export statements proving the GBP rates used.
Comparative table: token type and likely tax treatment
| Token type |
Treatment for backer |
Treatment for issuer |
| Donation / no token |
Disposal of crypto → CGT event; donor may have no income. |
Receipt may be non-trade income or capital receipt; tax depends on facts. |
| Pre-sale / product reward |
Disposal → CGT; treated like purchase of goods (no income tax for backer). |
Revenue for supplies → VAT and corporation tax may apply. |
| Utility token (access) |
Acquisition of asset; later disposal → CGT. |
Income if sold; VAT may apply if service-like. |
| Security-like token |
Potential investment classification; capital rules usually apply but can be treated as income. |
Subject to prospectus/FCA rules; income vs capital depends on structure. |
Info flow: how to document a crowdfunding crypto payment
Crowdfunding payment documentation flow
Follow this simple flow to ensure HMRC-ready records:
🔎 Step 1 → Record txid, wallet, crypto type
⏱️ Step 2 → Capture timestamp and source rate (exchange)
💷 Step 3 → Convert to GBP and note valuation method
🧾 Step 4 → Attach supporting docs: campaign terms, invoices
✅ Result → HMRC-ready entry for CGT/VAT/corporation tax
Advantages, risks and common mistakes
✅ Benefits / when to apply
- Accepting crypto can broaden investor reach and accelerate funding.
- Clear record-keeping and correct classification often minimise tax exposure.
- Early preparation helps claim allowable costs and VAT recovery where applicable.
⚠️ Errors to avoid / risks
- Treating token receipts as ‘non-taxable’ without substantiation.
- Failing to value crypto in GBP at time of receipt leading to misreported gains.
- Ignoring FCA/regulatory tests that turn tokens into securities.
Frequently asked questions
Can HMRC tax donations of crypto to a crowdfunding campaign?
Yes. A transfer of crypto is a disposal for CGT purposes; the recipient must also consider whether it is taxable income.
Do backers pay income tax when they receive tokens as rewards?
Usually no; backers face a disposal of crypto (CGT). Income tax arises if receipts are rewards with monetisable value treated as income by HMRC.
Does VAT apply when products are sold for crypto in a crowdfunding campaign?
If the supply is a taxable good or service, VAT applies on the GBP value at the time of supply; VAT registration rules still apply.
How should a company value received crypto for corporation tax?
Use a reliable exchange GBP rate at the time of receipt and document the source; recognise income in accounts at that GBP value.
Are tokens issued in crowdfunding eligible for SEIS or EIS reliefs?
Typically not. SEIS/EIS require qualifying shares; most tokens will not meet the strict company/shareholder tests required for those reliefs.
What records does HMRC want if a crowdfunding campaign uses multiple wallets?
HMRC expects mapping between wallet addresses, transaction IDs, timestamps and GBP valuations for each transaction.
If a backer swaps one crypto for another as their contribution, is there a tax event?
Yes. A crypto-for-crypto exchange is treated as a disposal and a new acquisition for CGT purposes; calculate gains in GBP using reliable rates at the times of swap.
When should a project get legal/regulatory advice regarding tokens?
Before launch if tokens provide rights similar to shares, profit, voting or fixed returns; this determines regulatory compliance and tax consequences.
Your next step:
- Export all crowdfunding transactions into a single ledger and add GBP valuations from a documented source.
- Classify each transaction by role (donation, sale, investment) and map tax consequences (CGT, income, VAT, corporation tax).
- If tokens might be securities, instruct a regulatory lawyer and tax specialist to review campaign materials before accepting funds.