Capital gains tax on disposals, staking rewards as income, and the HMRC matching rules. Estimate your UK crypto tax bill using the Section 104 pool method — perfect for tax planning and self-assessment prep.
The UK taxes cryptocurrency in two main ways: Capital Gains Tax (CGT) on most transactions when you dispose of your crypto, and Income Tax when you receive crypto as a reward or benefit.
Capital Gains Tax applies when you: Sell crypto for GBP, swap one crypto for another (yes — crypto-to-crypto is a disposal), pay for goods or services with crypto, or gift crypto to anyone except your spouse (spousal transfers are no-gain-no-loss). You pay CGT at 18% (basic rate) or 24% (higher rate) on gains above £3,000 AEA per tax year.
Income Tax applies when you: Receive staking rewards (taxed at market value on receipt), mining rewards (self-employment income), airdrops if received for a service or action (not if free), or DeFi yield (generally income on receipt). These all count as income in the year received.
Same-day rule (first): Disposals on a given day are matched against acquisitions on the same day first. If you bought 1 BTC at £30k and sold 0.5 BTC at £40k on the same day, your gain is (£40k − £30k) = £10k on that 0.5 BTC.
Bed-and-breakfast / 30-day rule (second): Any remaining disposal quantity is next matched against acquisitions in the following 30 days. This stops you from selling at a loss on Friday and buying back on Monday to claim a tax loss dishonestly. If you sold 1 BTC on 1 Feb and bought 1 BTC on 15 Feb, the 15 Feb purchase is matched to the 1 Feb disposal, not the other way around.
Section 104 pool (third): Everything else goes into a pooled average. The "pool" tracks total GBP cost ÷ total units held. When you dispose, you use the pool's average cost basis. This is the most common situation. Over time, as you buy and sell, the pool's cost per unit changes.
Many people mistakenly think crypto tax only applies when you cash out to GBP. That is wrong. When you swap 1 ETH for 10 USDC on a DEX, that is a disposal of ETH at its GBP market value on the day of the swap. You crystallise a gain or loss. The USDC is then acquired at that same GBP value. This applies to DeFi swaps, exchange trades, and atomic swaps. Keep detailed records of every swap.
Staking rewards: When you stake 1 ETH and earn rewards, each reward is income at its GBP value on the date received. If you stake on a platform and they send you tokens daily, each day is a separate income receipt. Taxed as miscellaneous income.
Mining: If you mine crypto, it's self-employment income at market value on receipt (or if applicable, assessed under the receipts basis). Report on a self-assessment tax return or in your business accounts.
Airdrops: Free airdrops (no action required) are not income on receipt — you just acquire them at zero cost, and any later gain is pure CGT. But if you received an airdrop in return for staking, providing liquidity, or completing a task, it counts as income at receipt.
DeFi yield: Yield farmed from liquidity provision is generally income when you receive it. This is complex and depends on how it's structured; consult an adviser for large positions.
| Item | Amount |
|---|---|
| Total sale proceeds | £0 |
| Less: total cost basis (pool average) | £0 |
| Gross gain on disposals | £0 |
| Less: Annual Exempt Amount (£3,000) | £0 |
| Plus: other gains this year | £0 |
| Taxable gain | £0 |
| Staking/mining income | £0 |
| Airdrop income (service) | £0 |
| Total income (crypto) | £0 |
| Total income (all sources) | £0 |
| Basic rate threshold (£50,270) | £0 |
| Taxable gains in basic band @ 18% | £0 |
| Tax at 18% | £0 |
| Taxable gains in higher band @ 24% | £0 |
| Tax at 24% | £0 |
| Total CGT | £0 |
| Income tax on crypto income (basic rate 20%) | £0 |
| TOTAL TAX (CGT + INCOME) | £0 |
Here's how HMRC's matching rules work in practice. Suppose you own ETH and transact as follows:
1 Jan: Buy 1 ETH at £1,500 cost (pool: 1 ETH, £1,500 cost)
15 Feb: Sell 0.5 ETH at £2,000 proceeds (same-day rule: no same-day buy, so move to 30-day rule)
20 Feb: Buy 0.3 ETH at £1,800 cost (30-day rule: the 15 Feb sale matches here first)
30 Mar: Sell 0.2 ETH at £1,800 proceeds (no same-day or 30-day buy; use pool)
Cost allocation: The 15 Feb sale of 0.5 ETH matches the 20 Feb buy of 0.3 ETH (30-day rule). So 0.3 ETH @ £1,800 cost = £540 cost, gain = (£2,000 × 0.3 / 0.5) − £540 = £1,200 − £540 = £660. The remaining 0.2 ETH @ 15 Feb uses the pool: average cost was (£1,500 / 1) = £1,500 per ETH initially, so 0.2 ETH = £300 cost, gain = (£2,000 × 0.2 / 0.5) − £300 = £800 − £300 = £500. The 30 Mar sale of 0.2 ETH uses the pool at the new average cost after the 20 Feb purchase. The pool now has 1.3 ETH (1 original + 0.3 new) at (£1,500 + £1,800) = £3,300 cost, so average = £3,300 / 1.3 = £2,538 per ETH. Selling 0.2 ETH: cost = 0.2 × £2,538 = £507.60, gain = (0.2 × £1,800) − £507.60 = £360 − £507.60 = loss of £147.60.
In this example, the 15 Feb gain and 30 Mar loss offset slightly. Always track every transaction in date order.
This tool uses the Section 104 pool average for all disposals — it does not apply same-day or 30-day matching. For an actual tax return, you must manually match each disposal and apply the three rules in order. Use detailed transaction records or crypto tax software. Any disposal in the year must match against acquisitions in this order: (1) same day, (2) next 30 days, (3) pool. Misapplying the rules can lead to under-reporting of gains and penalties from HMRC.
Keep records of every purchase, sale, swap, reward, and airdrop. For each, note the date, amount, value in GBP at the time, and counterparty (exchange, wallet, etc.). Many exchanges provide export functions; use them. For off-exchange or DeFi activity, manually log transactions from blockchain explorers or your wallet. Five years of records are needed for a self-assessment inquiry.
If you sold crypto at a loss, the loss is real from a CGT perspective. You can claim capital losses against any gains in the same year. If you have more losses than gains, the excess can be carried forward indefinitely to offset future gains — but never against income. Use losses strategically to minimise the year's net gain.
If your holdings are hacked or the token genuinely becomes worthless (e.g., the project dies), you can claim a "negligible value" disposal. This treats the loss as of the date you became aware it was worthless, even though you didn't sell. Keep evidence of the loss. This is a complex claim; seek professional advice before filing.
Crypto tax becomes painful when combined with many small transactions. Every swap is a taxable event. Consider consolidating DeFi positions less frequently, and always tag transactions for later reporting. Use a spreadsheet or dedicated crypto tax tool to simplify the calculation when it's time to file your return.
HMRC's crypto guidance is still developing. The rules described here reflect current practice as of 2026/27, but tax law changes. Income tax on staking, the treatment of airdrops, and DeFi yield are still areas of interpretation. This calculator is educational. For large holdings or complex positions, consult a tax adviser or accountant who specialises in crypto. Do not file a self-assessment return based solely on this tool.
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