ÂżTe worried about how HMRC treats Bitcoin for Capital Gains Tax? Many UK residents hold Bitcoin and face uncertainty when selling, swapping or spending it. This guide gives immediate clarity: precise rules, stepâbyâstep reporting, record templates and worked examples aimed at resolving HMRC Bitcoin CGT questions quickly and confidently.
Key takeaways: what to know in 1 minute
- HMRC treats Bitcoin as a chargeable asset for Capital Gains Tax (CGT) for most individuals â disposals can create taxable gains.
- A disposal happens on sale, exchange, spending or gifting (except certain transfers) â timing and the pooling rules matter for CGT calculations.
- Keep complete records: date, value in GBP, transaction type, counterparty, and running total of pooling cost basis are essential for HMRC compliance.
- Use the Annual Exempt Amount (AEA) strategically: apply it to the tax year where it delivers greatest benefit; separate-year planning matters.
- Report via SelfâAssessment: include detailed calculations, claim losses where allowable and pay within the SelfâAssessment deadlines to avoid penalties.
How HMRC treats Bitcoin for capital gains tax (clear legal position)
HMRC classifies Bitcoin as a cryptoasset for tax purposes. For most individuals, Bitcoin is not currency for income tax by default; instead it is a chargeable asset subject to Capital Gains Tax when disposed of. The legal basis and practical guidance appear across HMRC's guidance pages and the Cryptoassets Manual. For reference, see HMRC's official guidance: HMRC: Tax on cryptoassets.
Key elements:
- Disposals of Bitcoin normally create a chargeable gain or allowable loss under the Taxation of Chargeable Gains regime.
- The base cost is normally the sterling value at acquisition, adjusted for allowable costs (e.g., exchange fees).
- Pooling rules (section 104) apply: identical assets acquired at different times are grouped into a single pool to calculate allowable cost per unit.
- Special rules such as same-day, bed-and-breakfast (30âday), and section 104 pooling determine which acquisition(s) match a disposal.
When HMRC treats transactions as trading or income (brief note)
Most casual Bitcoin holders fall under CGT. However, activity that crosses into a trading pattern (frequent buying/selling with profit-seeking intent) may be taxed under income tax rules instead. HMRC considers frequency, organisation and commerciality; seek specialist advice if circumstances are borderline.
When Bitcoin disposals trigger a CGT liability (practical triggers)
A disposal for CGT occurs when one of the following applies:
- Selling Bitcoin for GBP (realising a gain or loss).
- Exchanging Bitcoin for another cryptoasset (crypto-to-crypto swaps are disposals taxed on the fair market value in GBP at the time of exchange).
- Spending Bitcoin for goods or services (the value of Bitcoin spent is treated as proceeds).
- Gifting Bitcoin to non-spouse/non-civil partner (gifts are disposals at market value and can trigger CGT; gifts to spouse/partner may be exempt for CGT but have IHT implications).
Examples and worked calculation (step by step)
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Example 1 â sale for GBP: Bought 1 BTC at ÂŁ5,000 (July 2019). Sold 1 BTC at ÂŁ30,000 (January 2024). Proceeds = ÂŁ30,000; allowable cost = ÂŁ5,000 + fees. Gain = ÂŁ25,000 less AEA and any losses.
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Example 2 â crypto-to-crypto swap: Exchanged 0.5 BTC for 10 ETH when 0.5 BTC = ÂŁ15,000. Proceeds = ÂŁ15,000; allowable cost = pooled cost of 0.5 BTC. Gain computed in GBP at disposal time.
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Example 3 â spending: Paid for goods worth ÂŁ200 using Bitcoin worth ÂŁ200 at time of transaction â this counts as disposal at ÂŁ200.
- Transfers between wallets owned by the same individual do not create a disposal for CGT, provided ownership does not change.
- Transfers to a spouse/civil partner where both are UK-domiciled may be exempt for CGT (but documentation is recommended).
Record-keeping best practice for cryptoassets and HMRC (exact fields and templates)
HMRC requires comprehensive records. Best practice is to collect and store the following for every transaction:
- Date and time (UTC)
- Type of transaction (buy, sell, swap, spend, gift, transfer)
- Asset (e.g., BTC), amount, and counterpart (wallet/exchange)
- Value in GBP at the transaction time (source used and FX rate)
- Fees paid and who paid them
- Running balance and pooled cost data after each transaction
- Transaction ID / hash and supporting exchange statements
A simple CSV template columns example:
- date, type, asset, amount, counterparty, value_gbp, fee_gbp, pool_cost_after, notes
Maintaining a running pool (section 104) is the most common compliance gap. Use software or spreadsheet formulas to compute the aggregated cost per unit after each acquisition and to identify which lot(s) match a disposal under same-day, 30-day and pooled rules.
Checklist: records HMRC expects for Bitcoin CGT
â Date & tx ID
UTC timestamp and transaction hash
â GBP value & source
Exchange rate or market price used
â Fees shown
Record who paid and in which currency
â Pool balances
Updated after each acquisition
Using your Annual Exempt Amount with Bitcoin gains (how to apply AEA)
The Annual Exempt Amount (AEA) is a tax-free allowance for capital gains. For individuals in the 2025/26 tax year, confirm the AEA on the official HMRC rates page; the amount can change and is subject to government announcements. The AEA reduces taxable gains in a tax year.
Practical points:
- AEA applies to total net gains in a tax year across all assets, not per disposal.
- Use AEA on the tax year where the net gain is higher if timing control is available (example: deliberate scheduling of disposals across tax years).
- If gains in a tax year are below AEA, no CGT is payable and typically no SelfâAssessment entry is required unless disposals exceed the reporting threshold or other reporting triggers apply.
Worked example: optimising AEA
If two disposals fall either side of 5 April, moving one disposal (legally and practically) into the next tax year can preserve AEA usage. Care is required to respect market practice and not to trigger anti-avoidance rules.
Claiming losses and reliefs on Bitcoin disposals (what HMRC allows)
Allowable losses on Bitcoin disposals can be set against gains in the same tax year, carried forward to future years or offset against other gains. Key rules:
- Losses must be reported to HMRC to be used in the same year or carried forward â a formal claim may be required for certain offsets.
- Private losses from disposals are generally allowable, but losses from a business trading in crypto may be treated differently.
- Reliefs such as investors' relief or holdover relief rarely apply to personal Bitcoin disposals; most bereavement or business asset reliefs are inapplicable.
Steps to claim a loss
- Calculate allowable loss in GBP (proceeds less allowable costs and pooling adjustments).
- Report the loss in SelfâAssessment or on a capital gains summary (SA108) and keep evidence.
- Claim to carry forward if necessary; maintain records for HMRC inspection.
Filing Bitcoin CGT on SelfâAssessment and payments (how to report and pay)
Reporting and payment options depend on amounts and timelines.
- Small gains under AEA normally do not need reporting or payment.
- Net gains above AEA must be reported in the SelfâAssessment SA108 form or via the Capital Gains Tax service if the gain arises within the current tax year and meets the online reporting thresholds.
- Payment deadlines follow standard SelfâAssessment schedules: balancing payment by 31 January following the end of the tax year, with possible payments on account.
Step-by-step filing process (practical checklist)
- Compute all disposals in the tax year and convert values to GBP on disposal dates.
- Apply pooling and matching rules to determine gains or losses per disposal.
- Aggregate gains and losses; apply AEA and compute taxable gains.
- Complete SA108 pages in SelfâAssessment including per-disposal summaries and attach workings.
- Pay tax due by 31 January; use HMRC online services for payment. Late reporting or payment risks interest and penalties.
How to fill SA108 specifically for crypto (practical hints)
- Use the SA108 capital gains supplementary pages.
- Include a clear summary line referencing Bitcoin or cryptoassets in the description and attach a detailed spreadsheet or PDF of workings.
- If using an agent or software, ensure exported workings match HMRC's required fields and attach or reference the file in the return.
Comparison: common disposal types and HMRC treatment
| Disposal type |
CGT outcome |
Record focus |
| Sale for GBP |
Chargeable gain/loss |
Exchange receipt, fees, GBP value |
| Crypto-to-crypto swap |
Chargeable disposal at GBP market value |
Market price source, matched pooling |
| Spending (goods/services) |
Disposal at GBP value when spent |
Receipt/invoice showing fiat equivalent |
| Gifting to non-spouse |
Disposal at market value |
Evidence of market value and recipient details |
Advantages, risks and common mistakes
Frequently asked questions
Do I pay CGT on Bitcoin sold for GBP?
Yes. Selling Bitcoin for GBP is a disposal and can create a chargeable gain or allowable loss, calculated using GBP values at acquisition and disposal.
How are crypto-to-crypto swaps taxed by HMRC?
A swap is treated as a disposal of the disposed asset at its GBP market value at the time of exchange; gains are computed in GBP.
What records will HMRC expect for Bitcoin transactions?
Date/time, amount, asset, GBP value at the time, fees, transaction ID and wallet/exchange details; maintaining a pool balance after each acquisition is essential.
Can losses on Bitcoin be used to reduce other gains?
Yes, allowable losses can be offset against other capital gains in the same year or carried forward, subject to reporting rules.
Do transfers between personal wallets trigger CGT?
No, transfers between wallets owned by the same individual do not normally create disposals, provided ownership does not change.
How does the same-day and 30-day rule affect Bitcoin disposals?
Same-day and 30-day matching rules determine which acquisition is matched to a disposal for CGT calculations and can affect the gain/loss computed under pooling rules.
When must Bitcoin gains be reported even if below the AEA?
If total proceeds from disposals exceed the reporting threshold or if the taxpayer has capital gains to report (e.g., to claim loss relief), then reporting may be required even if gains fall below AEA.
Is staking or receiving Bitcoin as income a CGT matter?
Receiving Bitcoin as income (e.g., mining or staking rewards) may create an income tax liability at grant/receipt; subsequent disposal of that crypto will be subject to CGT on disposal. Seek tailored advice for income-classified events.
Conclusion
Careful record keeping, correct application of pooling rules and timely SelfâAssessment reporting are essential to comply with HMRC Bitcoin CGT requirements. Apply the AEA sensibly and document all calculations to minimise risk of enquiries.
Your next steps:
- Export transaction history from exchanges and wallets into a CSV and ensure each row contains date, amount, asset and GBP value.
- Build a section 104 pool using acquisitions only; apply sameâday and 30âday matching rules to recent disposals.
- Complete SA108 with attached workings and pay any liability by the SelfâAssessment deadline to avoid penalties.