What Are the Rules for Declaring Cryptocurrency on Taxes? (UK 2026/27)

When clients ask “what are the rules for declaring cryptocurrency on taxes?”, you must guide them through a rapidly tightening regulatory landscape. HM Revenue & Customs (HMRC) does not view cryptoassets as gambling or currency; instead, they treat them as taxable property.

For the 2026/27 tax year, the government has overhauled Capital Gains Tax (CGT) rates and introduced the Cryptoasset Reporting Framework (CARF), which forces exchanges to report your clients’ transaction data directly to HMRC. This guide breaks down exactly how to calculate, report, and manage cryptocurrency taxes under UK law.

The Default Treatment: Capital Gains Tax (CGT)

HMRC clearly states that in the vast majority of cases, individuals hold cryptoassets as personal investments.  Consequently, they must pay Capital Gains Tax when they dispose of their tokens.

A disposal occurs when a taxpayer:

• Sells cryptoassets for fiat currency (e.g., pounds sterling).
• Exchanges one type of cryptoasset for a different type (a “crypto-to-crypto” exchange).
• Uses cryptoassets to pay for goods or services.
• Gives away cryptoassets to another person (unless it is to a spouse or civil partner).

Crucially, crypto-to-crypto trades are fully taxable events.  When a taxpayer trades Bitcoin for Ethereum, they must calculate the sterling value of the acquired Ethereum at the moment of the trade to determine the consideration received, and assess the gain or loss on the disposed Bitcoin.

2026/27 CGT Rates and Thresholds

If your client generates a capital gain, they must assess their profits against the Annual Exempt Amount (AEA). For the 2026/27 tax year, section 1K of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) sets the individual AEA at a strict limit of £3,000.

If net gains exceed £3,000, new CGT rates apply. The Finance Act 2025 amended section 1H of TCGA 1992, increasing the main rates of Capital Gains Tax for non-residential assets:

• Basic Rate Taxpayers: Pay CGT at 18%.
• Higher and Additional Rate Taxpayers: Pay CGT at 24%.

Calculating Gains: Section 104 Pooling and Matching Rules

To calculate the allowable cost of disposed tokens, you cannot arbitrarily choose which tokens you sold. You must apply the statutory share pooling rules under section 104 of TCGA 1992.

Under these rules, you must group fungible tokens of the same type (e.g., all Bitcoin or all Ethereum) into a single “section 104 pool”.  This pool possesses a combined total token quantity and a “pooled allowable cost”.  However, Non-Fungible Tokens (NFTs) are separately identifiable, so you do not pool them.

When your client disposes of tokens, you must match the disposal to acquisition costs in a strict statutory order:

1. The Same-Day Rule (s 105 TCGA 1992): You first match the disposal against any tokens of the same type acquired on the exact same day.
2. The 30-Day Rule (s 106A TCGA 1992): If the disposal exceeds the same-day acquisitions, you match the remaining disposed tokens against any identical tokens acquired within the 30 days following the disposal.
3. The Section 104 Pool: If the disposal still exceeds the tokens caught by the same-day and 30-day rules, you treat the remainder as a part-disposal of the Section 104 pool.

Arithmetic Example: Your client buys 100 Token A for £1,000. Months later, they buy 50 Token A for £125,000.

1. Pool Creation: They have a section 104 pool of 150 Token A, with a total pooled allowable cost of £126,000.
2. Disposal: They sell 50 Token A (with no same-day or 30-day acquisitions) for £300,000.
3. Apportion Cost: £126,000 × (50 / 150) = £42,000 allowable cost.
4. Calculate Gain: £300,000 consideration minus £42,000 cost = £258,000 taxable gain.

When Does Income Tax Apply?

In specific scenarios, cryptoasset receipts trigger Income Tax rather than CGT. HMRC confirms that individuals must pay Income Tax (and potentially National Insurance contributions) on cryptoassets received from:

• Their employer as a form of non-cash payment.
• Mining activities and transaction confirmation.
• Airdrops (if received in return for providing a service or acting in a commercial capacity).

If the mining or staking activity does not amount to a financial trade, HMRC taxes the sterling value of the awarded tokens at the time of receipt as miscellaneous income.  To determine the final tax liability on this income, you must run the receipts through the statutory step-by-step calculation found in section 23 of the Income Tax Act 2007 (ITA 2007).

If the taxpayer keeps these awarded assets and later sells them, the initial sterling value taxed under Income Tax becomes the baseline allowable cost for the future CGT calculation.

The 2026/27 Trap: CARF Automatic Reporting

For the 2026/27 tax year, hiding cryptoassets is practically impossible. The government has implemented the OECD Crypto-Asset Reporting Framework (CARF) into domestic law.

Section 275 of the Finance Act 2026 mandates that UK Reporting Cryptoasset Service Providers (RCASPs)—which include popular exchanges and wallet providers—must collect data on their UK resident users and report it directly to HMRC.  This measure forces UK platforms to report transaction data on domestic users, plugging the visibility gap.  The UK will initiate its first international data exchanges under CARF in 2027, exposing non-UK exchange data to HMRC as well.

Record Keeping Requirements

Because of this intense scrutiny, robust record-keeping is a statutory necessity. Taxpayers must keep a permanent record of the amount spent on each type of token, as well as the ongoing pooled allowable cost of each section 104 pool.

Summary of 2026/27 Cryptoasset Tax Rules

Next steps for advisors: Request complete transaction histories (CSV files or API data) from all of your clients’ crypto exchanges well before the Self Assessment deadline, and use specialised crypto tax software to correctly automate the section 104 pooling and 30-day matching rules.