Do you know how much tax you should be paying on your cryptocurrency? Understanding the latest figures

HMRC is stepping up its scrutiny of cryptocurrency investors, having issued more than 65,000 warning letters over the past year to individuals who may have failed to declare taxable crypto gains.

For the first time, HMRC has also released figures showing the scale of cryptocurrency gains being reported by taxpayers during the 2024/25 tax year.

How much tax has been paid by crypto investors?

According to the latest figures, 17,600 taxpayers declared a combined £1.38 billion in taxable cryptocurrency gains during the 2024/25 tax year.

The figures reveal a significant concentration of gains among a relatively small number of investors.

Approximately 900 taxpayers reported gains of more than £250,000, with this group accounting for around 70 per cent of the total gains declared.

Across all taxpayers, the average reported cryptocurrency gain was approximately £78,000.

While these figures demonstrate the substantial profits that can be generated from cryptocurrency investments, HMRC believes that significant amounts of taxable gains may still be going unreported.

HMRC has also highlighted concerns surrounding younger investors, particularly those who may not understand that tax can arise from transactions involving cryptocurrency.

What taxes do crypto investors have to pay?

Simply buying cryptocurrency and continuing to hold it will not normally trigger a tax liability.

The position can change when you dispose of your crypto or receive cryptocurrency as income. Depending on the circumstances, you may need to report your activity to HMRC through Self Assessment.

There are two main taxes to consider:

• Capital Gains Tax (CGT) – This can apply when you dispose of cryptocurrency and make a taxable gain. A disposal can include selling crypto for cash, exchanging one cryptocurrency for another, using cryptocurrency to buy goods or services, or gifting crypto to someone other than your spouse or civil partner or a charity.
• Income Tax – This may apply where cryptocurrency is received as income. For example, this could include cryptocurrency received as payment for work, staking rewards or income generated through mining activities.

When working out CGT contributions, you must first subtract what you originally paid for the crypto, on top of any allowable fees, from the value of the crypto when you disposed of it, that exceeds the tax-free allowance of £3,000.

If you are a basic rate taxpayer, you will pay an 18 per cent tax on CGT disposals and if you are a higher or additional rate taxpayer, you will pay a 24 per cent tax on CGT disposals.

If you pay Income Tax on crypto, you must record the value of any cryptocurrency on the day that you received it.

This will then be added to your regular yearly income and will be taxed according to your Income Tax bracket.

For investors, it is always important to keep records of every trade that is made so that you can be aware of the tax that you need to pay.

How can we help?

We understand that understanding tax on cryptocurrencies can be difficult and that often, people do not even realise that they need to pay tax on their crypto assets.

Our team of accountants can provide support with your cryptocurrency tax affairs. We can help you understand which taxes may apply, calculate your potential liability and assist you with reporting and paying the tax owed to HMRC.

With HMRC increasing its focus on cryptocurrency investors, making sure your crypto tax affairs are up to date is more important than ever.

Get in touch with our team for support with cryptocurrency tax.