UK crypto tax, explained properly

The single most expensive misconception in crypto: 'I only pay tax when I cash out to pounds.' Wrong — and HMRC receives data from major exchanges, so wrong in a way that increasingly gets letters written about it.

What triggers tax

Buying with pounds and holding triggers nothing. Transfers between your own wallets trigger nothing (but keep records proving it).

• Selling crypto for pounds — disposal, CGT
• Swapping one token for another — disposal, CGT (this is the one that surprises people)
• Spending crypto on goods or services — disposal, CGT
• Gifting to anyone but your spouse — disposal at market value
• Staking rewards, mining, airdrops for doing something — usually income tax when received, then CGT on later disposal

How gains are calculated

UK rules pool each token: all your ETH forms one pool with an average cost (a 'section 104 pool'). Sell some and the gain is proceeds minus the pooled average cost — not the specific coins you think you sold. Same-day and 30-day repurchase rules override the pool to stop bed-and-breakfasting. Across hundreds of trades on multiple exchanges, this is genuinely hard by hand, which is why we reconstruct positions with proper tooling and reconcile to your wallets.

The annual exempt amount is £3,000 — small enough that modest portfolios now generate reportable, taxable gains. Losses matter: registered losses carry forward against future gains indefinitely, so a bad year is worth filing, not forgetting.

Nudge letters

HMRC's crypto letters say, roughly: we know you've traded; check your position. Ignoring one is the worst response — the letter proves they hold data. The right response is reconstructing your position, disclosing anything due, and replying. Voluntary disclosure is consistently cheaper than being pursued. Our nudge-letter package (£249) does exactly this.