¿Te preocupa not being sure how historic ICOs and token sales are taxed in England? Many early investors bought tokens before markets existed; HMRC rules still apply and can create unexpectedly large CGT or income liabilities.
This guide focuses solely on ICO & Token Sale Tax UK (Historical Investors). It provides concise key outcomes up front, then step-by-step practical rules, worked examples, reporting checkpoints for Self Assessment and an evidence checklist HMRC is likely to accept.
Key takeaways: what to know in 1 minute
- ICO proceeds are taxable in England: disposals of tokens normally trigger Capital Gains Tax (CGT) unless the circumstances create taxable income. HMRC treats many token sales as capital disposals.
- Historical valuation matters: the cost basis for ICO tokens is the fair market value in GBP when acquired; where no market existed, use contemporaneous evidence (whitepapers, receipts, exchange rates). Document the method.
- Special rules affect identification and pooling: HMRC applies pooling and matching rules (same-day, 30-day and Section 104 pooling) when calculating gains — these can change which tokens are matched to disposals.
- Report on Self Assessment (SA108): include crypto disposals on SA108 in the year of disposal even if no CGT is due. Late or missing returns risk penalties and enquiries.
- Keep robust evidence for at least six years: blockchain tx, receipts, KYC, whitepapers, exchange export CSVs and contemporaneous GBP valuations. HMRC expects verifiable timestamps.
Are ICO and token sale proceeds taxable in England?
ICO and token sale proceeds are taxable events for UK taxpayers when a disposal occurs. For most individual historical investors that means CGT applies: when tokens are sold, exchanged, spent or otherwise disposed of, any gain (disposal proceeds minus allowable cost) is potentially subject to CGT.
HMRC's approach is outcome-focused: whether proceeds are income or capital depends on the nature of the receipt and the investor's activity. For pure investors who bought tokens in an ICO and later sold them, CGT is the usual treatment. For receipts that amount to trading, employment, or the receipt of tokens as payment for services, Income Tax and National Insurance can apply instead.
Authoritative sources: HMRC Cryptoassets Manual and the generic tax-on-cryptoassets guidance should be consulted. See HMRC cryptoassets manual and HMRC tax on cryptoassets.
How HMRC treats historical ICO investments for CGT
Historical ICO investors face three core hurdles for CGT:
- establishing the acquisition date and cost in GBP,
- applying matching and pooling rules when multiple disposals occur,
- handling cases where no market price existed at issue.
Determining acquisition date and market value for early ICOs
- Acquisition date: normally the date the investor obtained control of the tokens (often the date tokens were sent to the investor's wallet or claimed). If tokens were distributed over a vesting schedule, each tranche has its own acquisition date and cost basis.
- Cost basis: the market value in GBP at the acquisition date. Where tokens were purchased with fiat, use the actual GBP cost. Where purchased with another crypto (e.g. BTC or ETH), convert using a widely accepted rate at the time — document the source (exchange tick, CoinGecko historic price, etc.).
- No market at issue: if there was no public market at the ICO date, base valuation on contemporaneous evidence: the ICO price stated in the whitepaper, funds raised and token distribution, internal valuation memos or press releases. Use conservative, reproducible methods — HMRC accepts reasonable valuation methods if documented.
Caveat: valuations must be defensible. If HMRC opens an enquiry, the investor should be able to show how the GBP value was obtained and why that method reasonably reflects value at the time.
Grouping and matching rules that affect historical ICO tokens
HMRC applies rules equivalent to share matching for crypto:
- Same-day rule: disposals are first matched with acquisitions on the same day.
- 30-day rule: disposals next match acquisitions within 30 days.
- Section 104 pooling: remaining holdings pool for averaging cost.
These rules can materially alter which acquisition events are matched to a disposal and therefore which cost basis applies.
Example: if 1,000 tokens were acquired across three ICO tranches and 300 tokens were disposed of later, the calculation will follow same-day → 30-day → pooled units. For historical investors who received many small airdrops or tranche releases, matching can increase gains tax if cheaper units are matched first.
Reporting token sale disposals on your Self Assessment
Reporting is mandatory for any taxpayer with chargeable gains above the annual exempt amount or where total disposals (not just gains) exceed the reporting threshold. Best practice: declare all taxable disposals on SA108 in the tax year they arise.
How to fill SA108 fields for token disposals
- Use the SA108 supplementary pages (Capital Gains) for any disposals of cryptoassets.
- For each disposal, record:
- Date of disposal,
- Description (token name and short note: ICO origin or exchange),
- Disposal proceeds in GBP,
- Allowable costs (acquisition cost in GBP, transaction fees, conversion fees),
- Net gain/loss.
If multiple disposals occurred in the tax year, aggregate using the standard SA108 summary and attach or keep a full computation and supporting schedule. HMRC may request the schedule; the Self Assessment form itself supports totals but not detailed per-token breakdown — a supporting spreadsheet should be retained.
Deadlines, penalties and practical notes
- Self Assessment deadline: online filing by 31 January following the tax year; payment on account rules may apply.
- Late filing/late payment attracts penalties and interest. Disclosure errors can lead to enquiries and penalties; voluntary disclosure (prompt amendment) can reduce penalty exposure.
- If unsure whether disposal gives rise to a gain, include a short note in the tax return and keep the detailed computation; HMRC prefers transparent reporting.
Calculating cost basis for exchanged or swapped tokens
A common historical scenario: tokens were bought in an ICO, later swapped for other tokens or used directly to buy services/products. Treat swaps as disposals at the market value of the token given up, with the acquisition cost of the token received set to that same market value for future disposals.
Practical rules and worked example
- Rule: when token A is swapped for token B, value token A at the time of swap in GBP (disposal proceeds). That GBP amount is compared with the acquisition cost of token A to compute the gain. Token B’s cost equals the market value used for token A.
Worked example:
- ICO purchase: 10,000 XYZ tokens acquired on 01/06/2016 for the equivalent of £500 (cost basis £0.05/token).
- Swap on 01/08/2018: 2,000 XYZ swapped for 5,000 ABC tokens. Market value of the 2,000 XYZ at swap = £3,000 (derived from contemporaneous exchange rate).
- Disposal gain on swap: disposal proceeds £3,000 − allowable costs (2,000 × £0.05 = £100) = £2,900 taxable as CGT.
- New cost basis for ABC tokens received: total cost £3,000 for 5,000 ABC → £0.60/ABC for future CGT calculations.
Special considerations for multiple-step swaps and DeFi
- For chained swaps (A→B→C), treat each swap as a disposal and acquisition; this can crystallise multiple taxable events.
- For decentralised exchanges and automated market-maker trades, use the timestamp and a reputable price feed for GBP conversion (document source).
When token receipts count as income not capital gains
Receipt of tokens can be income rather than capital where tokens are received in return for services, as employment remuneration, or as part of trading activity. For ICOs, the following indicators point towards income taxation:
- tokens were given as payment for services (including advisory roles tied to the ICO);
- tokens were received as part of a trading business with a profit-seeking motive and frequent activity;
- tokens were paid as remuneration in the course of employment/contracted work;
- tokens were part of a contractual vesting arrangement in exchange for promised ongoing effort.
If income tax applies, include the GBP value of tokens when received in the taxpayer’s annual income (PAYE/employment or self-employment/trading income). Employer-provided tokens should be reported on PAYE and liable for NICs.
Sources and guidance: see HMRC employment income manual and the cryptoassets manual sections on income.
Record keeping and evidence HMRC expects from investors
HMRC expects thorough, contemporaneous records. For historical ICO investors, assemble the following minimum evidence and keep copies for at least six years:
- Wallet addresses and blockchain transaction IDs (txids) for each acquisition and disposal.
- Exchange CSV exports showing fiat or crypto amounts and timestamps.
- Whitepapers, ICO terms and token distribution schedules.
- ICO receipts, KYC confirmations, email confirmations and invoices.
- Screenshots or PDFs of project pages showing the ICO price, token supply and distribution details with timestamps.
- Source used for historic GBP conversion (exchange tick/time, CoinMarketCap/CoinGecko archived price) and method documentation.
- Records of any fees (exchange fees, gas costs) associated with acquisition and disposal — many fees are allowable costs for CGT.
Checklist (practical):
- Wallet tx list exported (CSV/JSON)
- ICO purchase receipt or email
- Exchange trade history with timestamps
- GBP conversion source and calculation note
- Supporting whitepaper or project announcement
HMRC typically requests more than a simple screenshot; primary data exports and a maintained spreadsheet with reconciled conversions are preferred.
Table: tax outcome by type of token disposal (historic ICO focus)
| Disposal type |
Usual tax treatment |
Key evidence required |
| Sale for GBP on exchange |
CGT on gain (disposal proceeds less cost) |
Exchange withdrawal CSV, GBP receipt, wallet txid |
| Swap token-for-token |
CGT on disposed token; acquired token cost = disposal GBP value |
Swap txid, price feed at swap, exchange/DEX record |
| Spend tokens to buy goods/services |
CGT if disposed; Income tax if received as payment by seller |
Invoice, payment txid, GBP valuation at spend time |
| Tokens received as payment for work |
Income tax (and NICs if employment) |
Contract, payslips, evidence of service performed |
| Airdrop from project to ICO participants |
Usually CGT at disposal; may be income if linked to services |
Airdrop txid, project announcement, link to entitlement |
ICO tax process flow (timeline)
ICO token tax flow for historic investors
1️⃣
Record acquisition
Save ICO receipt, txid, GBP valuation
2️⃣
Track disposals
Note date, type (sale/swap/spend), proceeds
3️⃣
Convert to GBP
Use a verifiable price feed and record source
4️⃣
Apply matching rules
Same-day → 30-day → pooled cost
5️⃣
Report on SA108
Include detailed schedule and keep records 6+ years
Analysis: advantages, risks and common errors for historical ICO investors
✅ Benefits / when this applies
- Potentially lower acquisition costs (ICO pricing) can create large gains that are attributable to CGT and use of the annual exempt amount.
- Documented ICO receipts and clear exchange history make calculations straightforward and defensible.
- Electing to report accurately reduces penalty risk and increases chance of an early settlement if HMRC queries arise.
⚠️ Errors to avoid / risks
- Poor valuation records: no contemporaneous GBP valuations increase HMRC enquiry risk.
- Ignoring swaps and DeFi transactions: these often create taxable disposals even without fiat conversion.
- Misclassifying income vs capital: incorrectly treating remuneration as an investment disposal or vice versa triggers additional liabilities and penalties.
- Failing to apply matching rules: incorrect application can under- or overstate gains.
Frequently asked questions
Are ICO tokens always subject to CGT when sold?
Not always. Most investor disposals are CGT events, but tokens received as payment for services or as employment remuneration are subject to Income Tax. The facts determine treatment.
How should cost be calculated if the ICO had no GBP price?
Use the best contemporaneous evidence: ICO stated price, funds raised, or exchange rates when tokens first traded. Document the source and conversion method used to convert any crypto-paid purchase into GBP.
Do swaps between tokens trigger taxable events?
Yes. Swapping one token for another is a disposal of the token given up and acquisition of the token received; calculate a gain using GBP value at the swap time.
What records will HMRC want for a 2016 ICO investment?
Wallet txids, ICO purchase receipt, whitepaper, exchange exports, GBP conversion source and a reconciliation spreadsheet showing computations and fees.
When must disposals be reported on Self Assessment?
Disposals that generate a taxable gain above the annual exempt amount or where total disposals exceed the reporting threshold should be reported in the tax year the disposal occurs. Best practice is to report all disposals on SA108.
Can historic losses from ICO tokens be used against other gains?
Yes. A crystallised capital loss in the same tax year can be set against gains in that year; unused losses can usually be carried forward subject to the normal CGT rules.
How long should records be kept for ICO transactions?
Keep records for at least six years after the tax year to which they relate, to support HMRC enquiries and any amendments.
Your next step:
- Gather immediate evidence: export wallet txs, exchange CSVs and ICO receipts; record GBP conversions with sources.
- Prepare a line-by-line computation for each disposal this tax year applying same-day, 30-day and pooled matching rules.
- File or amend Self Assessment (SA108) with totals and retain the detailed supporting schedule; seek professional advice if gains appear large or documentation is incomplete.