What is the UK crypto tax free allowance for 2025?
For the 2025/26 tax year, the Capital Gains Tax (CGT) allowance remains at £3,000. This is also known as the capital gains tax allowance, annual exempt amount, and annual tax free allowance. These terms refer to the tax-free threshold for capital gains in a given tax year, allowing you to make a certain amount of profit from selling or exchanging cryptocurrencies before tax applies.
This allowance applies to all your capital gains combined – not just crypto. So if you’ve also made money selling shares or property, these all count towards your £3,000 limit. This is your capital gains allowance for the year.
HMRC views cryptocurrencies as “chargeable assets” rather than currency. This classification is why they fall under CGT rules rather than being treated like pounds or dollars. Certain transactions can be capital gains tax free if your total gains fall within the allowance.
Each time you sell, trade, or spend crypto, it counts as a disposal for tax purposes. Even swapping between different cryptocurrencies triggers a potential tax event.
Remember, this £3,000 allowance is per person. If you’re married or in a civil partnership (spouse or civil partner), couples can effectively double their allowance to £6,000 by each using their full amount.
Let’s break it down
Trying to make sense of crypto taxes can feel like decoding a blockchain itself! With HMRC paying closer attention to digital assets, understanding your tax position has never been more important.The 2025 tax year brings continued changes to how your crypto investments are taxed. Tax in the UK applies to a range of cryptocurrency activities, including trading, mining, and disposing of crypto assets, and it’s important to know which types of taxes—like Capital Gains Tax or Income Tax—may apply to your crypto dealings.
Our Pie.tax app tracks your crypto transactions in real-time, so you’ll always know where you stand with HMRC. Cryptocurrency transactions are increasingly being crypto taxed by HMRC, so understanding which activities are taxed and which are not is crucial. Or if you’re just here to get to grips with it all, let’s break it down!
How cryptocurrency is taxed in the UK
When you dispose of crypto – by selling, trading, or even buying a coffee with it – you trigger a potential tax event. These are considered taxable crypto transactions and may result in taxable gains subject to different tax rates depending on your circumstances. HMRC wants its slice of any profit you make.
Basic rate taxpayers pay 10% CGT on crypto gains above the allowance. This is the capital gains tax rate, and the applicable tax rate depends on your income tax band or income tax bracket. Higher and additional rate taxpayers face a 20% rate after using the £3,000 tax-free allowance.
It’s not just selling for pounds that counts. Swapping Bitcoin for Ethereum? That’s a disposal. Using crypto to buy goods? That’s a disposal too. Selling crypto for fiat currency (like GBP) is also a taxable event and subject to crypto capital gains tax.
Understanding tax on crypto in the UK requires knowing how much tax you owe on each type of transaction.
Maximising your tax-free crypto allowance
Timing is everything. Consider spreading disposals across tax years to make the most of your annual allowances.
If you’re married or in a civil partnership, you can transfer assets to your spouse tax-free. This lets you use both of your allowances effectively.
Don’t forget to factor in allowable costs when calculating gains. This includes acquisition costs, transaction fees, and even some wallet costs.
If you’ve made losses on some crypto investments, these can be offset against your gains. You can offset gains and even offset future gains by carrying forward capital losses to reduce your tax liability in future years. You need to report these losses to HMRC, even if you don’t owe tax. You should register your capital loss on your assessment tax return to ensure you can use it against future gains.
Last year, I sold some underperforming altcoins at a loss. By reporting this to HMRC, I was able to offset these losses against gains from my Bitcoin sales, saving nearly £200 in tax. If you don't report your losses, you may owe capital gains tax unnecessarily.
The “bed and spouse” technique might be worth considering. This involves selling assets to realise gains up to your allowance, then having your spouse repurchase similar assets.
Key changes to crypto taxation for 2025
The £3,000 CGT allowance represents a massive drop from previous years. Back in the 2022/23 tax year, crypto investors enjoyed a generous £12,300 allowance.
HMRC is getting savvier about crypto. They’re receiving more data from exchanges. Crypto exchanges report user transaction data to HMRC as part of the crypto asset reporting framework, increasing transparency and ensuring accurate reporting of crypto activities.
We’re expecting clearer guidance on DeFi taxation in 2025. Areas like liquidity provision and yield farming currently sit in something of a grey area.
The crypto tax reporting landscape is becoming more stringent. Self-assessment forms now include specific sections for crypto assets, making it harder to “forget” to declare.
With these tighter rules, proper record-keeping has never been more crucial. Every transaction, fee, and exchange rate needs documenting. Generating accurate tax reports is essential for compliance and serves as proof of your crypto activity for HMRC.
Common crypto tax mistakes to avoid
Many people forget that crypto-to-crypto exchanges are taxable events. Just because you haven’t converted to pounds doesn’t mean you’re off the hook.
Using multiple exchanges or wallets makes tracking harder but doesn’t exempt you from tax. HMRC expects you to consolidate all your activity.
Missing the Self Assessment deadline (31 January 2026 for the 2025 tax year) can result in automatic penalties. This applies even if you don’t owe any tax. You must file a self assessment tax return and include a comprehensive tax report of your crypto activities to ensure accurate reporting to HMRC.
Disclosing Unpaid Tax and Crypto Tax Evasion
Failing to report your crypto transactions or pay the tax you owe can have serious consequences. HMRC is stepping up its efforts to detect crypto tax evasion, including working with crypto exchanges to identify unreported activity.
Accurate reporting of your crypto tax position is essential. If you’re unsure about your tax liabilities or how to report them, seeking professional advice can help you stay compliant and avoid penalties. You can also optimise your tax position by claiming all eligible deductions and using strategies like tax-loss harvesting.
Final Thoughts
With the £3,000 allowance for 2025 being so much lower than in previous years, smart tax planning is essential. UK crypto investors can no longer afford to be casual about their tax strategy.
HMRC's increasing focus on crypto compliance means casual investors can no longer fly under the radar. Good record-keeping isn't optional – it's necessary.
Staying informed about changing regulations and planning your disposals carefully can help minimise your tax burden. This approach keeps you on the right side of the law while optimising your tax position.
Pie.tax: Simplifying Crypto Tax
Managing your crypto taxes shouldn’t be a headache that keeps you up at night. The UK’s first personal tax app makes tracking your digital assets as simple as pie.
Pie.tax automatically calculates your capital gains on every crypto transaction. You’ll see in real-time how much of your £3,000 allowance you’ve used, preventing year-end surprises.
Our app connects directly with major exchanges and blockchain wallets, importing your transaction history with a few clicks. We handle complex calculations including share pooling and same-day rules.
When tax season arrives, everything is ready for your Self Assessment, with detailed reports for HMRC. The app generates comprehensive tax reports, including a capital gains tax summary, to help you accurately report your crypto taxes to hmrc. Plus, our tax specialists are there if you need help with more complex situations.
Fancy seeing how it works? Pop over to Pie.tax to explore the app that’s taking the stress out of crypto taxation.
