¿Te preocupa how to recover value from crypto losses for UK tax purposes? Many taxpayers are uncertain how HMRC treats Bitcoin losses and how to record them correctly on Self-Assessment returns. This practical guide focuses exclusively on Crypto Losses Relief: which losses qualify, when disposals occur, how to claim on returns, and how to offset and carry forward unused losses under UK rules.
Key takeaways: what to know in 1 minute
- HMRC treats most personal disposals of crypto as capital disposals subject to Capital Gains Tax (CGT); losses are generally allowable against gains.
- Crypto-to-crypto trades can trigger disposal events under HMRC matching and pooling rules; record the exact date, quantity and market value in GBP.
- Claim allowable crypto losses on Self-Assessment by reporting disposals and using the losses section; unclaimed losses can still be carried forward if properly recorded.
- Offsetting losses follows a strict order: same-day, 30-day, matching, pooled; apply losses after matching rules and keep precise records.
- Carry forward unused losses indefinitely while resident, but they must be reported in the year of loss to preserve relief in later years.
How HMRC treats bitcoin losses for capital gains tax
HMRC classifies disposals of cryptoassets by individuals as capital transactions unless the activity amounts to trading. For most private investors, losses on Bitcoin and other cryptoassets are treated as capital losses. Capital losses are usable to reduce taxable capital gains in the same tax year or to be carried forward to set against future gains.
Key practical points:
- Allowed loss equals the difference between proceeds (GBP value on disposal) and the allowable cost (GBP value at acquisition plus allowable costs).
- Exchange or wallet movements that do not change beneficial ownership (for example, internal transfer between wallets with identical ownership) normally are not disposals. However, transferring to an exchange where an asset is sold does create a disposal for the portion sold.
- Records required: date of disposal/acquisition, GBP values, exchange rates used, chain/txid where relevant, and supporting exchange statements. HMRC may request evidence for up to 20 years in complex cases.
Authoritative reference: consult HMRC’s "Cryptoassets Manual" for detailed positions: HMRC.
When crypto to crypto trades create a disposal event
A crypto-to-crypto trade is a disposal for CGT purposes where the asset is exchanged for another asset. HMRC treats such swaps as two separate events: a disposal of the disposed asset and an acquisition of the received asset, both valued in GBP at the market rate at that time.
Practical implications:
- Valuation: Use a reliable market GBP price at the precise time of the trade. If direct GBP price is unavailable, use a major fiat pair (e.g. BTC/USD) plus a reliable USD/GBP rate from that time.
- Matching and pooling rules apply: acquisitions are matched to disposals using same-day, 30-day and Section 104 holding pools. This affects allowable gain/loss calculations.
- Example: swapping 0.1 BTC for 10 ETH on 12 March — treat as disposal of 0.1 BTC at its GBP value and acquisition of 10 ETH at the same GBP value.
Losses relief process visual
Losses relief process
1️⃣
Step 1 → Gather transaction history, exchange statements and wallet receipts.
2️⃣
Step 2 → Convert timestamps and values to GBP using reliable rates.
3️⃣
Step 3 → Apply HMRC matching and pooling to calculate allowable loss or gain.
4️⃣
Step 4 → Report on Self-Assessment and claim losses or carry forward.
Trading, mining or investing: how HMRC classifies activity
Classification matters because trading profits fall under income rules, not CGT losses. HMRC uses a facts-and-circumstances test considering frequency, organisation, intention to profit, and scale. Most casual investors will be outside trading classification and will use CGT treatment for losses.
Checklist indicating likely investor (CGT) treatment:
- Infrequent purchases/sales for personal investment
- No formal trading system or market-making
- No use of leverage or borrowed funds
- Profits not the primary business activity
If activity looks like trading, losses might be deductible as business losses against other income, subject to different rules and anti-avoidance provisions. Where classification is uncertain, seek specialist tax advice; refer to HMRC cryptoassets guidance.
Claiming allowable crypto losses on Self-Assessment returns
Reporting steps for individuals who are not traders:
- Calculate each disposal: determine proceeds, allowable costs and resulting gain or loss in GBP.
- Apply matching rules: same-day, 30-day and pooled matching may change which units are treated as disposed.
- Complete the Capital Gains pages of the Self-Assessment: list disposals and totals.
- Claim allowable losses: enter losses in the relevant boxes; if losses exceed gains, claim the loss on the tax return to create a current-year loss.
- Carry forward: if losses remain after offsetting gains, indicate intention to carry forward losses.
Practical filing tips:
- Use HMRC’s online Self-Assessment form where possible; attach an explanation and a summary schedule of disposals if the number of transactions is large.
- If a taxpayer misses claiming a loss on the original return, a claim can still be made later provided it meets time limits (see "carrying forward unused crypto losses" below).
- Keep a reconciled schedule and supporting export of exchange trade history; HMRC may ask for these.
Offsetting Bitcoin losses against capital gains: step-by-step
This section provides a practical how-to to ensure losses are applied correctly.
- Step 1: Gather and validate records
-
Export full transaction history from exchanges and wallets. Ensure timestamps, trade IDs and fiat conversions are present.
-
Step 2: Convert to GBP with reliable rates
-
Use the rate at the timestamp of disposal. Preferred sources include major exchange GBP pairs or reputable FX providers. Record the source and method.
-
Step 3: Apply matching rules
-
Same-day disposals match acquisitions made the same day first. Then 30-day rule (for acquisitions within 30 days of disposal), then Section 104 pooling for remaining holdings. Matching affects which acquisition cost is subtracted.
-
Step 4: Calculate gains and losses for each disposal
-
For each disposal, compute proceeds less allowable cost. If negative, that’s an allowable loss.
-
Step 5: Offset losses in order
-
Use losses against gains in the tax year after deducting allowable losses and applying annual exempt amount. If losses remain, claim to carry forward.
-
Step 6: Report and retain evidence
- Enter totals on Self-Assessment and keep a breakdown for HMRC. Maintain records for at least six years (longer for complex cases).
Practical worked example (concise)
- Bought 1 BTC on 01/04/2023 for £30,000. Sold 0.5 BTC on 05/07/2024 for £10,000. Proceeds £10,000, allowable cost for 0.5 BTC = £15,000 → loss £5,000. That loss may offset other capital gains in 2024/25, or be carried forward.
Carrying forward unused crypto losses under UK rules
Unused capital losses can be carried forward indefinitely against future capital gains, provided they are claimed on the tax return for the year when the loss arose. Key points:
- Notification requirement: to preserve the loss, the loss must be claimed on the Self-Assessment for the tax year in which it occurred or a claim must be made later within the allowable time limits; usually the claim should be made within four years of the end of the tax year in which the loss occurred if not included originally, but earlier notification is safer.
- Record-keeping: keep a clear carried-forward loss schedule showing how much of the loss remains after offsets in subsequent years.
- Use against future gains: carried-forward losses are applied after any current year losses and the annual exempt amount.
Table: quick comparison of loss outcomes by activity type
| Activity |
Treatment of losses |
Notes |
| Private investor |
Capital loss (CGT) |
Offset against capital gains, carry forward |
| Frequent, organised trading |
Income loss (possible) |
Different rules; may offset against income |
| Mining/staking as trade |
Business loss possible |
Complex; requires detailed analysis |
Advantages, risks and common errors
✅ Benefits / when to apply
- Claiming capital losses reduces future CGT liabilities and can materially lessen tax on profitable disposals.
- Precise recording and early claims preserve relief and avoid disputes.
- Using losses strategically after a bad year can reduce tax in future profitable years.
⚠️ Errors to avoid / risks
- Failing to convert values to GBP at correct timestamps.
- Misapplying matching/pooling rules (common mistake when numerous trades exist).
- Treating internal transfers as disposals incorrectly.
- Missing the claim on the original return and not understanding time limits for later claims.
Practical compliance checklist
- Export full trade history with timestamps and txids
- Convert each trade to GBP and document the FX source
- Apply HMRC matching and pooling rules before computing gains/losses
- Enter losses on Self-Assessment or make a formal claim if missed
- Keep records securely for at least six years, longer if complex
Questions frequently asked
What records does HMRC expect for crypto losses?
HMRC expects transaction dates, GBP valuations, exchange statements, wallet addresses and any supporting correspondence; keep originals and reconciled spreadsheets for review.
Can losses from an exchange hack be claimed?
Losses due to theft or hack may be claimable as capital losses if the assets are treated as disposed; documentation, police reports and exchange correspondence will be crucial evidence.
When should a taxpayer treat activity as trading rather than investment?
If activity is regular, organised, uses borrowed funds, or resembles a business, HMRC may treat it as trading; outcomes change loss treatment and professional advice is recommended.
How long can losses be carried forward?
Capital losses can be carried forward indefinitely against future gains, provided they are claimed in the tax year when incurred or properly notified later per HMRC rules.
Can losses be offset against income?
Only where HMRC determines the activity is trading or where specific rules allow it; most individual crypto investors will not be able to offset capital losses against income.
What happens if a loss is not claimed on the original return?
A later claim is possible but strict time limits and evidence requirements apply; keeping a clear audit trail helps if amending returns or making late claims.
Your next step:
- Gather a full export of exchange and wallet history and convert entries to GBP using a verifiable source.
- Apply matching and pooling rules to calculate allowable losses and prepare a concise schedule for Self-Assessment.
- File the loss on the relevant tax year return or make a formal claim and retain all evidence in case HMRC requests verification.
Written by Alan White, UK-based crypto tax researcher specialising in HMRC guidance and self-assessment reporting for individuals and businesses. For HMRC reference and further reading visit HMRC: tax on cryptoassets.