Are contributions to a crowdfunding campaign made in Bitcoin or other cryptoassets taxable, and if so how should they be valued and reported to HMRC? This guide gives a clear, step‑by‑step approach to Crypto Crowdfunding Tax for UK residents and UK‑based issuers so that the correct tax treatment, documentation and deadlines are known from the outset.
Key takeaways: what to know in one minute
- HMRC treats proceeds in crypto as receipts that need valuation in sterling at the time received. That valuation determines taxable income or base cost for later capital gains.
- Token receipts can be taxed as income or capital depending on their nature (donation/reward, sale of tokens, equity‑like token): classification matters.
- Crowdfunding platforms have reporting duties; issuers must keep robust records (timestamped receipts, exchange rates, wallet addresses) to withstand HMRC queries.
- SEIS/EIS relief can apply to tokenised equity in limited circumstances — documentary proof and advance planning are essential.
- Practical calculation examples and a template approach are provided: valuation formulae, how to compute taxable gains and examples for BTC, ETH, utility tokens, and equity tokens.
How HMRC treats crypto crowdfunding proceeds
HMRC approach rests on tax law concepts rather than crypto technology. For crowdfunding receipts paid in crypto, two sequential questions determine treatment: (1) what is the nature of the receipt (donation, sale, reward, subscription), and (2) what type of tax applies (income, corporation tax, or capital gains tax).
- Donation or pure gift: If funds are donations with no benefit in return, the recipient (usually a charity) will not normally pay tax. For non‑charitable recipients, HMRC may still view large gifts as taxable receipts if they form part of trading income.
- Rewards / pre‑sales (patronage or rewards crowdfunding): If contributors receive goods or services or tokens that function as rewards, proceeds are likely to be taxable as trading or miscellaneous income for individuals or corporations receiving them.
- Token sales (utility or security tokens): If tokens are sold in return for crypto, the issuer typically recognises proceeds as income (for trading/supply) or as capital in some limited disposals. Token classification (security vs utility) affects whether the token sale creates income taxed now or capital gains on later disposal for the recipient of tokens.
Valuation rule: convert the crypto amount to sterling at the market exchange rate at the moment of receipt. HMRC accepts reputable exchange rates and contemporaneous evidence (exchange screenshots, API rate logs). For small, frequent receipts, a consistent policy (e.g. end‑of‑day rate) is acceptable if applied consistently and documented.
Sources: HMRC cryptoassets guidance and general crowdfunding tax guidance at gov.uk crowdfunding and tax.
Income tax vs capital gains on token sales
Which tax applies depends on the counterparty and the factual pattern.
- Income tax or corporation tax: Applies where the issuer's activity amounts to a trade, where tokens are given in return for services or goods, or where tokens are issued as rewards. For individuals selling tokens received from a crowdfunding campaign as part of a business, taxable trading profits or employment income rules may apply.
- Capital gains tax (CGT): Typically applies to individuals disposing of crypto assets they hold as an investment. If a supporter receives tokens (e.g. an investor in a token sale) and later sells those tokens, CGT will often apply to the gain computed using the sterling value at acquisition and disposal.
Table: quick comparison of income tax vs CGT for token events
| Event |
Likely tax |
Key evidence |
| Token sold as part of business activity |
Income tax / corporation tax |
Business plan, receipts, invoices |
| Investor buys token and later sells |
Capital gains tax |
Acquisition/disposal timestamps, sterling values |
| Reward token with immediate economic benefit |
Income tax |
Terms of campaign, evidence of delivered benefit |
Practical point: for issuers, treat received crypto as revenue unless clear evidence and legal structure support capital treatment. For contributors, treat token acquisition in sterling at receipt as the base cost for CGT unless taxed as income.
Crowdfunding platforms facilitating crypto contributions have layered obligations.
- KYC/AML and FCA considerations: Platforms must comply with anti‑money laundering and, depending on token type, FCA registration or oversight. That affects record retention and reporting.
- Information to contributors and issuers: Platforms should supply clear statements of sterling value at time of transaction and receipts showing wallet addresses and timestamps. This reduces disputes when HMRC requests evidence.
- Data retention and HMRC enquiries: Platforms are expected to retain transactional logs and be able to supply exportable reports. HMRC can request information in an enquiry, and platforms may receive notices under CTA 2010.
Recommended template obligations for platforms:
- Provide a downloadable CSV with date/time (UTC), crypto amount, crypto type, sterling rate, sterling value, contributor wallet, issuer wallet, campaign ID.
- Issue formal receipts to contributors showing sterling equivalent and campaign terms.
Sources: FCA statements and HMRC guidance above.
Claiming SEIS, EIS and tax relief for crypto
SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) give income tax and CGT reliefs for qualifying investments. Applying these reliefs to crypto raises three practical hurdles:
- Is the token a qualifying 'shares' investment? SEIS/EIS are for shares in an unlisted company. Token structures that represent equity rights and meet statutory conditions may qualify; simple utility tokens will not.
- Valuation and money subscription rules: HMRC looks for a bona fide money subscription in sterling; crypto contributions may be converted to sterling at receipt and treated as money for subscription purposes, but advance clearance and documented valuation approach are advisable.
- Documentation and compliance: HMRC requires strict shareholder registers, subscription agreements and statements. Tokenised share registers must be backed by legal shareholdings and corporate resolutions.
Practical steps where SEIS/EIS is considered:
- Use a legal wrapper: issue legal shares and tokenise only as a secondary record; confirm that paid‑in value is recorded in the company accounts in sterling.
- Keep contemporaneous exchange evidence and board minutes approving acceptance of crypto as consideration.
- Consider advance clearance from HMRC if the structure is novel.
Case note: if tokens confer no voting rights or entitlement to dividends but are marketed as “equity‑like”, HMRC may disqualify the investment for SEIS/EIS. Legal counsel is usually required.
Record keeping and evidence for crypto fundraising
Accurate records are the single most important defence against HMRC enquiries. Minimum recommended records for each crypto crowdfunding receipt:
- Timestamped transaction hash and blockchain explorer link.
- Sender and receiver wallet addresses.
- Crypto amount and token type (BTC, ETH, stablecoin etc.).
- Sterling equivalent and the source of exchange rate (exchange, API, or closing price) with evidence (screenshot or API log).
- Campaign terms, contributor agreement and whether tokens/benefits were provided in return.
- Bank conversion receipts if crypto was converted to sterling through an exchange or broker.
Retention period: follow normal tax retention rules — individuals should keep records for at least 5 years after the 31 January submission deadline, companies for at least 6 years.
Practical template (spreadsheet columns):
- Date (UTC)
- Time (UTC)
- Campaign ID
- Contributor wallet
- Issuer wallet
- Crypto amount
- Crypto symbol
- Exchange used for sterling conversion
- Sterling rate at receipt
- Sterling value
- Transaction hash / explorer link
- Associated document references (invoice, terms)
Practical examples of crowdfunding tokens and tax calculations
Example 1: reward crowdfunding — creator receives 1.2 BTC as campaign proceeds
- Date: 1 June 2025. BTC received: 1.2. Spot BTC/GBP at receipt: £36,000 per BTC.
- Sterling proceeds recorded: 1.2 × £36,000 = £43,200.
- Tax position: creator treats £43,200 as income (self‑employed / trading receipts) on account of delivering rewards or services. Allowable expenses reduce taxable profit.
Example 2: investor receives utility tokens in exchange for 5 ETH (no immediate income to issuer if structured as capital raising and not trade)
- ETH value at receipt: 5 × £2,000 = £10,000.
- For investor: acquisition cost for CGT purposes = £10,000. If later sold for £16,000 sterling equivalent, chargeable gain = £6,000 (subject to annual CGT allowance and any reliefs).
Example 3: tokenised equity accepted in BTC by an early investor and SEIS/EIS claim
- Investor transfers 0.5 BTC when BTC is worth £15,000 per BTC → sterling subscription £7,500.
- Company issues ordinary shares in return and records £7,500 as paid share capital. If HMRC conditions for SEIS/EIS are met and the shares are qualifying, the investor may claim relief based on the sterling subscription, subject to the usual SEIS/EIS limitations.
Worked calculation tips:
- Always convert at the timestamp of receipt. If exchange rates diverge widely across platforms, document which rate was used and why.
- For pooled receipts or multi‑sender transactions, allocate sterling values pro rata by crypto amount.
- Where crypto is converted to sterling immediately by the platform, use the platform’s conversion receipt as primary evidence.
Crowdfunding crypto flows and taxation
Crypto crowdfunding flow: receipts to reporting
💸
Step 1 → Contributor sends crypto to campaign wallet
🧾
Step 2 → Platform issues receipt with sterling value
📥
Step 3 → Issuer records income or share subscription in sterling
🗂️
Step 4 → Maintain blockchain proof, rate source, and campaign terms
📝
Step 5 → Report in self‑assessment or company tax return; compute CGT when tokens sold
Advantages, risks and common errors
✅ Benefits / when to apply
- Access to global liquidity and fast settlement.
- Potential for automated distribution of tokenised rewards or equity.
- Clear audit trail on public blockchains when combined with sterling valuation records.
⚠️ Errors to avoid / risks
- Failing to record sterling equivalents at receipt time.
- Misclassifying token receipts (treating income as capital or vice versa).
- Assuming SEIS/EIS applies to tokenised investments without legal share documentation.
- Overlooking anti‑money laundering and FCA registration obligations.
Questions frequently asked
What is the tax treatment of donations given in Bitcoin?
Donations to a registered charity remain non‑taxable when the charity is the recipient. For non‑charitable recipients, HMRC may treat large or regular gifts as taxable income depending on circumstances; record the sterling value on receipt.
How should the sterling value of received crypto be calculated?
Use the market exchange rate at the exact timestamp of receipt and keep the exchange or API evidence. If consistent end‑of‑day rates are used for many small receipts, document the policy and apply it uniformly.
Do contributors pay income tax when they receive tokens as rewards?
Rewards that give an immediate economic benefit are likely to be taxable as income to the recipient rather than capital, depending on the beneficiary's status and the nature of the reward.
Can SEIS or EIS relief be claimed on investments made in crypto?
Yes, but only if legal shares are issued and all SEIS/EIS statutory conditions are met. Tokenised representations of shares alone are not sufficient unless backed by formal share issuance and proper documentation.
Platforms should supply CSV reports with timestamps, transaction hashes, sterling equivalents, and wallet addresses. Such reports support taxpayer claims and HMRC enquiries.
How are token sales taxed when an issuer is a company?
Proceeds from token sales by a trading company will attract corporation tax on profits. If tokens are capital in nature, the accounting treatment and tax position should follow company law and HMRC guidance.
Are stablecoins treated differently for valuation?
Stablecoins are valued in sterling at the time of receipt like any other cryptoasset. If pegged to GBP and settled immediately at par, documentation should still show the sterling equivalent used.
What happens if HMRC audits a crypto crowdfunding campaign?
Expect requests for transaction logs, conversion evidence, campaign terms and explanations of token classification. Robust contemporaneous records and legal documentation reduce the risk of adverse findings.
Your next step:
- Review campaign terms and decide whether receipts are donations, reward sales, or investments; document the decision.
- Implement a valuation policy: choose a reliable exchange/API, log timestamps and save evidence for every receipt.
- Prepare a one‑page compliance file per campaign (transaction CSV, receipts, wallet links, conversion evidence) and consult tax counsel if SEIS/EIS is claimed.