Crypto NFT Taxes: Simple UK Tax Guide for 2025

6 Jan

NFTs are all the rage right now, and the UK is right in the middle of the action. Whether you are creating digital art, flipping collectables for profit, or just exploring the NFT world for fun, there’s one thing you can’t ignore: taxes. Yep, even in the world of blockchains and JPEGs, HMRC wants its cut.

Figuring out how to do NFT taxes and how to pay NFT taxes doesn’t have to be a nightmare. With the correct info, you can navigate the rules, stay compliant, and maybe even keep a bit more of your hard-earned crypto gains.

Let’s break it all down.

What Are NFTs, and Why Does HMRC Care About Them?

Think of NFTs as the digital equivalent of owning a rare collectible; only instead of a physical item, you are holding a one-of-a-kind digital asset on the blockchain. From jaw-dropping digital art to concert tickets or even virtual real estate, NFTs are as versatile as they are valuable.

Here’s where HMRC comes in: they see NFTs as assets with real-world value. And if there’s value, there’s tax.

Here’s how it works:

Selling an NFT for Profit

If you sell an NFT for more than you paid, congratulations, you have made a capital gain. Unfortunately, that gain is taxable.

Buying NFTs with Crypto

Think you have sidestepped taxes by using crypto to buy an NFT? Think again. HMRC treats this as a double whammy.

First, it’s as if you sold the crypto (which could trigger a taxable event), and second, you are acquiring the NFT, which sets its own tax rules in motion.

Gifting an NFT

Even generosity isn’t off the hook. Gifting an NFT could also be taxable, depending on the situation (like its market value or who you are gifting it to).

How Are NFT Sales Taxed in the UK?

So, you have sold an NFT and made some cash—nice work! But before you celebrate too hard, HMRC wants to know about it. In the UK, selling an NFT is treated as the disposal of an asset, and any profit you make from that sale is subject to Capital Gains Tax (CGT).

Let’s break it down step by step.

1. Calculate Your Gain

The first thing to figure out is how much profit (or "gain") you made. It’s a simple formula:
Sale Price - Purchase Cost (including fees) = Gain

You bought an NFT for £2,000 (including transaction fees).

You sold it for £5,000.

Your gain is £3,000 (£5,000 - £2,000).

This £3,000 gain is the amount HMRC is interested in.

2. Check Your Tax-Free Allowance

The UK has a yearly CGT allowance, which is a free pass for a portion of your gains. For the 2025 tax year, let’s assume it’s £6,000 (double-check with HMRC because these thresholds can change).

If your total gains across all assets (NFTs, shares, property, etc.) are below £6,000, you don’t owe any CGT.

If your gains exceed £6,000, you will only pay tax on the amount over this threshold.

3. Pay the Correct CGT Rate

The CGT rate you pay depends on your income:

Basic-rate taxpayers: 10% on the excess gains.

Higher or additional-rate taxpayers: 20% on the excess gains.

Example for a Basic-Rate Taxpayer:

You’ve made gains of £10,000, and £4,000 is taxable (after the £6,000 allowance).

10% of £4,000 = £400 owed in CGT.

Example for a Higher-Rate Taxpayer:

Same £10,000 gain, £4,000 taxable.

20% of £4,000 = £800 owed in CGT.

Quick Tips for NFT Sales Tax in the UK

Keep Records: HMRC will want proof of what you paid for the NFT, transaction fees, and how much you sold it for.

Track All Assets: Your CGT allowance applies across all assets—not just NFTs. Keep an eye on your total gains.

Stay Updated: Tax laws change, so check HMRC’s latest guidelines every year.

How do NFT taxes in the UK be charged?

Filing taxes on your NFT transactions might sound like a hassle, but if you break it down into steps, it’s actually pretty manageable.

Here’s exactly how to stay on top of your NFT taxes in the UK.

1. Keep Accurate Records

HMRC isn’t kidding when it comes to record-keeping. If you are buying, selling, or even gifting NFTs, you will need to log every single detail. It is your “digital paper trail.”

Here’s what to track:

Dates of Transactions: Note when you bought, sold, or traded an NFT.

Values in GBP: HMRC deals in pounds, not crypto. Use the exchange rate on the day of the transaction to convert your crypto amounts to GBP.

Costs Incurred: Don’t forget to include transaction fees, like gas fees on Ethereum. These can reduce your taxable gains, so they’re worth noting.

Use crypto tax software like Koinly or CoinTracking to automate record-keeping. It’s worth it if you are juggling multiple transactions.

2. Calculate Gains or Losses

Now, it’s time to crunch the numbers. HMRC wants to know how much you gained or lost from each NFT transaction.

For crypto-to-NFT transactions, remember to include any gains or losses from the crypto itself.

3. Use the Right Tax Forms

Once you have worked out your gains and losses, it’s time to let HMRC know. You must file a Self-Assessment Tax Return (SA100 form) and include details in the Capital Gains section.

What to include:

Total gains or losses from NFTs and other assets (like shares or property).

Any allowances or exemptions you’re claiming (e.g., your annual CGT allowance).

4. Pay Any Tax Due

The final step is paying what you owe. The deadline for paying Capital Gains Tax in the UK is typically 31 January following the end of the tax year.
If you made a taxable gain in the 2024/25 tax year (ending 5 April 2025), your tax payment is due by 31 January 2026.

You can pay your tax:

Online through HMRC’s website.

By bank transfer or via direct debit.

Payment services like PayPal can be used if supported.

Make It Easier on Yourself

Automate Calculations: Crypto tax software can calculate your gains and losses in GBP.

Get Expert Help: If your NFT activity is complex, consult the Crypto Accountants.

Stay on Top of Deadlines: Mark key dates in your calendar to avoid late fees or penalties.

Final Thoughts!

NFTs open up a world of exciting opportunities, but with great digital assets come great tax responsibilities.

Staying on top of your NFT taxes doesn’t have to be a headache. Keep clear records, understand HMRC’s rules, and file on time. You will not only avoid penalties but also keep more of your hard-earned profits.

At Crypto Accountants, we specialize in making sense of complex tax rules so you can focus on what you love.

Book a consultation today. Let’s make 2025 your most tax-savvy year yet!

Malik Ali