¿Is donating Bitcoin to UK charities tax-advantageous?
Is donation of Bitcoin to a UK charity genuinely tax-advantageous, or is it simply a neat story that falls apart after fees and paperwork? Many donors face this exact question when crypto has performed well: should one give the asset directly, sell and donate cash, or use an intermediary? The following concise analysis delivers the practical answer first, then the technical detail necessary to make an informed decision.
Donating Bitcoin can be tax-advantageous for UK donors who are liable to Capital Gains Tax (CGT) on disposals. Gifts of cryptoassets to UK-registered charities are treated as exempt disposals for CGT purposes, which can avoid a chargeable gain that would otherwise arise on selling. That advantage depends on purchase cost, the asset's value at donation, conversion fees, and whether Gift Aid applies. All figures and examples are indicative and current at time of writing.
Executive summary: Is donating Bitcoin to UK charities tax-advantageous? in 60 seconds
- Donating Bitcoin can avoid CGT: Gifting crypto directly to a UK-registered charity is generally treated as an exempt disposal for Capital Gains Tax purposes, so no gain arises on that disposal for the donor.
- Gift Aid is limited: Most charities cannot claim Gift Aid on donated crypto directly; rules depend on whether the charity treats the gift as money and on its receipts process.
- Valuation and records are critical: Donors must evidence the value at the time of the gift and keep transfer records to claim any reliefs or to support self assessment entries.
- Fees and conversion trade-offs matter: Exchange conversion fees, custody fees and on‑ramp/off‑ramp costs can reduce or eliminate tax benefit compared with selling first and donating cash.
- Edge cases exist: Donors who are non-UK tax residents, charities outside the UK, or gifts via DAFs or exchanges require careful handling and may not receive the same CGT advantage.
Who benefits from donating Bitcoin to UK charities
Donating Bitcoin tends to benefit donors who would otherwise realise a significant capital gain on disposal. Typical beneficiaries include:
- Individuals with chargeable gains above the annual CGT exempt allowance, where gifting removes a taxable disposal.
- Donors in higher-rate taxpayer positions for whom CGT at 20% (or 28% for residential property rates where applicable) would apply — avoiding CGT is relatively more valuable for higher-rate contexts.
- Donors wanting to transfer value to charity without triggering a sale on exchange and incurring reporting obligations in Self Assessment.
Donors who may not benefit include:
- People whose gains would fall within the annual CGT allowance, where the tax benefit from gifting is minimal or nil.
- Donors subject to residency rules that place the gain outside UK taxation (non-UK tax residents) — in such cases the CGT advantage may not apply.
Relevant guidance from HMRC can be reviewed at HMRC: Tax on disposals of cryptoassets.
How HMRC treats crypto gifts for Capital Gains Tax
For CGT, HMRC treats a gift of an asset to a charity as an exempt disposal provided the recipient is a UK-registered charity and the transfer is a genuine gift. The donor therefore does not realise a chargeable gain on that disposal. Key points:
- The gift must be to a UK-registered charity (or other qualifying charity) to qualify for the exemption.
- The exemption applies to the donor's disposal — the charity may owe tax when it later converts to fiat if it is trading, but charities typically treat crypto as a donation and convert under their own policies.
- If a donor uses an exchange-run donation product, confirm whether the exchange is the donor's agent or the charity's recipient; the tax outcome can differ.
HMRC's technical manual and guidance pages should be considered for detailed cases; a relevant HMRC page is available at HMRC.
Example: simple CGT saving calculation
- Purchase cost (base cost): £2,000 (0.1 BTC purchased historically).
- Market value at donation: £12,000 (0.1 BTC at donation price).
- If sold first: chargeable gain £10,000. With CGT at 20% (example), tax ≈ £2,000.
- If donated directly: no CGT on the disposal for the donor — potential saving ≈ £2,000 before considering fees.
This simplified example is indicative. Actual rate depends on the donor's circumstances and the correct CGT rate (10%/20% for gains on most assets; 18%/28% applies to residential property). Always treat figures as illustrative and consult HMRC guidance.
Valuation, proof and record-keeping requirements for donations
Accurate valuation and documentation are mandatory to rely on tax treatment and to support Self Assessment entries. HMRC expects:
- A clear record of the date and time of the transfer, the number of units transferred, and the counterparty address (charity wallet or intermediary account).
- Market value at time of gift: use a reliable exchange rate source and note which exchange/time was used. If multiple exchanges differ, document rationale.
- Evidence the recipient is a UK-registered charity: retain charity registration number and receipts.
- Confirmation the charity received the crypto: a signed receipt or official donation acknowledgement specifying the crypto, date, and value at receipt.
Records should be kept for at least the same period as other tax records — typically six years in the UK. In cases of disposals close to tax year‑end, accurate timestamping becomes especially important.
Proof examples to keep
- Transaction hash and wallet addresses for the transfer.
- Charity receipt stating number of BTC and market value on receipt date.
- Screen captures or API logs showing the exchange rate timestamp used for valuation.
- Correspondence with the charity or exchange about conversion choices.
Tax reliefs, Gift Aid and donor claims explained
Primary relief: the CGT exemption for gifts to qualifying charities. Secondary points relate to Gift Aid and income tax:
- Gift Aid normally applies to cash donations to UK charities. For Gift Aid to be claimed, the charity must receive the donation in cash (or convert the donation to cash promptly) and hold the necessary Gift Aid declaration from the donor.
- If the charity converts crypto to fiat immediately and treats the proceeds as cash receipts, Gift Aid may be available provided the donor completes a valid declaration and the donation is eligible under Gift Aid rules. Donors should ask the charity to confirm its Gift Aid policy on crypto.
- A donor cannot normally claim income tax relief on a gift of an asset (as opposed to cash) unless special arrangements apply. The CGT exemption is the principal donor-side benefit for crypto.
Example scenario:
- Donor transfers Bitcoin directly to a UK charity that immediately sells for £12,000 and issues a receipt. If the donor gave a valid Gift Aid declaration and the charity treats the proceeds as a Gift Aid-eligible donation, the charity can claim 25% additional basic-rate top-up (indicative). The donor may be able to claim additional higher-rate relief via Self Assessment depending on tax position. This pathway requires the charity's processes to support Gift Aid on sales proceeds and careful record-keeping.
Always confirm Gift Aid procedures with the chosen charity and retain the Gift Aid declaration copy.
Costs, conversion fees and hidden trade-offs of crypto gifts
The headline CGT saving can be eroded or negated by several costs. Practical considerations include:
- Exchange conversion fees: If the charity must convert crypto to fiat, exchanges or OTC desks usually charge a spread and fees. If an intermediary converts on behalf of the donor or charity, additional costs apply.
- Custody and transfer costs: Network fees (e.g., Bitcoin transaction fees) and custody provider withdrawal charges reduce net proceeds.
- Timing and price slippage: Volatile markets mean the value at transfer confirmation may differ from the quoted value at initiation.
- Service fees from donation platforms: Platforms that accept crypto donations on behalf of charities may charge a platform fee or keep a percentage.
Compare three routes: donate asset directly; sell first and donate cash; use a donor-advised fund (DAF) or platform.
| Route |
Typical tax outcome |
Common costs |
| Donate Bitcoin directly to charity |
Donor: CGT exempt; Charity: receives crypto (may sell) |
Network fees, charity conversion fees, platform fees |
| Sell on exchange, donate cash |
Donor: CGT due on sale; donor can claim Gift Aid on cash |
CGT payable, exchange fees, bank fees |
| Use a donor-advised fund or crypto donation platform |
Varies: some platforms remit crypto to charity or convert on receipt |
Platform fees, spread, custody charges |
A donor should run a simple net-proceeds calculation: estimated CGT saved minus expected fees and lost time value equals net financial benefit. If fees exceed the tax saving, selling then donating cash may be more efficient for the charity (higher net donation) even if the donor pays CGT.
When not to donate Bitcoin: edge cases and pitfalls
Donating Bitcoin is not always the right move. Warning signs include:
- The recipient is not a UK-registered charity: CGT exemption may not apply if the charity is foreign or not registered.
- The donation is structured via an exchange or third party that treats the sale as the donor's disposal (agent or sale on behalf). If the donor has effectively sold the asset before the charity receives it, CGT can arise.
- The charity refuses or cannot accept crypto or lacks internal policy to convert promptly and account for Gift Aid.
- The donor is non-UK tax resident or subject to complex domicile/residence rules — tax benefits may be different or absent.
- The donation involves complex crypto situations: airdrops, forks, multisig wallets, or partial gifts where valuation is unclear.
Special caution is required where the donor attempts to claim Gift Aid inappropriately or lacks documentary proof. HMRC may challenge declarations without robust evidence.
Balance strategic: what donors gain and what they risk by donating Bitcoin to UK charities
When it is the best option ✅
- Donor faces a large, taxable gain and wants to transfer value tax-efficiently.
- Charity accepts crypto directly and converts with low fees or can retain crypto.
- Donor wants to reduce future reporting obligations and simplify estate planning.
What to watch out for ⚠️
- High conversion fees and platform charges that reduce net donation.
- Charity inability to process Gift Aid or to provide adequate receipts.
- Unclear timing or valuation leading to HMRC queries.
[Visual] donation flow at a glance
Step 1 🟢 Check charity accepts crypto → Step 2 🔎 Confirm charity wallet & registration → Step 3 ⏱️ Record timestamp & tx hash → Step 4 💳 Charity converts (if needed) → ✅ Donation complete and records filed
Donation flow: donor to charity
1️⃣
Confirm charity registration
Check Charity Commission entry and obtain receipt protocol
2️⃣
Agree transfer method
Direct wallet transfer or platform on behalf
3️⃣
Send and record details
Transaction hash, date/time, value used for valuation
4️⃣
Charity converts/receives
Obtain official receipt stating BTC amount and GBP value
Practical checklist before donating Bitcoin to a UK charity
- Confirm the charity is on the Charity Commission register and obtain registration details.
- Ask the charity how it will accept and process crypto and whether it can apply Gift Aid.
- Record the transaction hash, wallet address and time of transfer; capture the market rate source used for valuation.
- Request an official donation receipt that states number of units, date, and the GBP value at receipt.
- Consider platform/transaction fees and request a fee schedule if using a third party.
- For gifts close to tax year-end, consider timing to align with the desired tax year.
Dues and disclosures: what charities should know (brief)
Charities that accept crypto should have clear policies for conversion and accounting, know whether Gift Aid can be processed, and comply with anti-money-laundering requirements under guidance from the FCA and the Charity Commission. This ensures donor confidence and reduces operational risk.
Dudas rápidas sobre Is donating Bitcoin to UK charities tax-advantageous?
How does HMRC define a gift to charity for CGT purposes?
A gift to a qualifying UK-registered charity is treated as an exempt disposal, so the donor normally does not realise a chargeable gain; documentary evidence is crucial to support the claim.
Why might Gift Aid not apply to a crypto donation?
Gift Aid usually applies to cash; charities must convert the crypto to cash and have a valid Gift Aid declaration and accounting process to claim Gift Aid on proceeds.
What happens if the charity is outside the UK?
If the recipient is not a UK-registered charity, the donor may not get CGT exemption; cross-border rules and local tax treatment should be checked with a tax professional.
How should the value of donated Bitcoin be calculated?
Use a reliable exchange rate at the time of the transfer, record the source and timestamp, and retain screenshots or API logs to substantiate the valuation.
What if the donation is via an exchange donation product?
Clarify whether the exchange sells the asset on behalf of the donor or on behalf of the charity; the tax outcome depends on which party is deemed to have disposed of the asset.
Can donors claim income tax relief on donated Bitcoin?
Income tax relief for gifted assets is limited; the primary donor-side benefit for crypto gifts in the UK is the CGT exemption rather than income tax relief.
What records are essential for Self Assessment after a crypto donation?
Keep the transaction hash, charity receipt with GBP valuation, exchange rate evidence, and any correspondence confirming how the donation was processed.
What if HMRC asks for proof of donation years later?
Retain records for at least six years and be prepared to provide transaction data, charity receipts and valuation evidence; this reduces the risk of a successful enquiry.
Your action plan: take these three steps in 10 minutes
Ready to act
- Check the charity's registration on the Charity Commission website and confirm it accepts crypto.
- Prepare a screenshot of current BTC/GBP rate and copy the charity wallet address; initiate a small test transfer if uncertain.
- Email the charity requesting a formal receipt that states the BTC amount and GBP value at receipt and ask whether Gift Aid can be applied.
Conclusion
Donating Bitcoin to a UK-registered charity can be tax-advantageous because a direct gift is generally an exempt disposal for Capital Gains Tax, which may produce meaningful tax savings. However, the net benefit depends on fees, conversion practices, Gift Aid eligibility and robust record-keeping. Donors should weigh the CGT saving against conversion and platform costs and confirm procedures with the charity. For complex or high-value donations, consultation with a regulated tax adviser is recommended to ensure compliance and to confirm the most efficient route.
