Last updated on 18 August 2026
You can use tax-loss harvesting in crypto to reduce your taxable gains and lower your overall tax bill, if done correctly under current UK rules.
With crypto markets still as volatile as ever, many investors are sitting on both winners and losers in their portfolio. But what if those underperforming coins could help you pay less tax? That’s where tax-loss harvesting comes in.
It’s a strategy that allows you to use your crypto losses to offset your gains, a legal and effective way to manage your Capital Gains Tax (CGT). If done right, it can save you hundreds or even thousands of pounds each tax year.
What is Tax-Loss Harvesting in Crypto?
Selling cryptocurrency assets that have lost value to realise a capital loss is known as “tax-loss harvesting.” This loss can then be used to offset gains made on other crypto assets (or other chargeable assets), reducing your CGT liability.
Let’s say you made £8,000 in profit on Ethereum but lost £3,000 on Solana. If you sell the Solana at a loss before the tax year ends, you can deduct that £3,000 from your gains, bringing your taxable profit down to £5,000.
Why Tax-Loss Harvesting in Crypto is Important
The CGT allowance in the UK was reduced again in April 2024, from £6,000 to just £3,000. It’s now much easier to exceed this threshold and owe tax on your crypto gains.
With many investors holding a mix of profitable and loss-making coins, tax-loss harvesting has become even more important for those who want to reduce their exposure to tax while staying compliant with HMRC.
How It Works: Step-by-Step
Tax-loss harvesting is a practical way to use losses to your advantage. Below is a simple roadmap for how to apply this strategy the right way.
1. Spot the Red in Your Wallet
The first step is scanning your crypto portfolio and pinpointing coins that have dropped below what you paid.
Look at assets that no longer fit your long-term goals, those that might not recover anytime soon.
2. Make It Real: Sell to Unlock the Loss
A loss on paper won’t help your tax bill. You must dispose of the asset (usually by selling) to lock in the loss for tax purposes.
This “realised” loss is what HMRC recognises when calculating Capital Gains Tax.
3. Subtract the Pain from the Profit
After realising your loss, you can subtract it from any capital gains made from shares, real estate, or cryptocurrency in the same tax year.
Don’t worry if your losses exceed your earnings; you can carry over any excess to subsequent tax years.
4. Report It, Even If You Owe Nothing
HMRC expects transparency. Always include your gains and losses on your Self Assessment tax return, even if your net tax bill is zero. Because unreported losses can’t be used in future years unless they’re officially recorded.
Important Rules to Follow
The 30-Day Rule (Also Called “Bed and Breakfasting”)
In traditional investing, you can’t sell shares to realise a loss and immediately buy them back the next day to claim the tax benefit. The UK has a 30-day rule that prevents this tactic.
In crypto, the 30-day rule also applies. HMRC won’t let you claim the loss if you sell Bitcoin at a loss and then buy it again within 30 days. Instead, the cost basis will be adjusted, and you lose the chance to offset the gain.
Tip: If you want to stay invested in the same asset, you could:
- Buy a different crypto with similar exposure
- Wait 31 days to repurchase
- Use a different exchange or wallet to hold the rebuy; just be aware that it’s still tracked for CGT
Record-Keeping and Reporting
HMRC expects thorough records for all crypto transactions. This includes:
- Date of each buy and sell
- Quantity and value of crypto involved
- Wallet addresses
- Exchange rates used for conversion to GBP
Use crypto tax software or consult a specialist accountant from Crypto Accountants to keep this data in order. Mistakes in cost basis or transaction history can lead to underpayment penalties.
What Not to Do?
- Don’t buy the same coin back too quickly. The 30-day rule will cancel your tax benefit.
- Don’t forget to report. Even if your net gain is zero, unreported disposals can raise red flags.
- Don’t assume all losses qualify. For example, sending crypto to a lost wallet may not count as a realised loss under HMRC rules.
Final Thoughts
Tax-loss harvesting is one of the simplest and smartest ways to reduce your crypto tax bill, especially now that the CGT allowance is lower than ever. However, it only works if you keep thorough records, submit everything correctly, and abide by the rules.
At Crypto Accountants, we help UK crypto investors use strategies like tax-loss harvesting safely and effectively.
Book a free consultation with Crypto Accountants today and let us show you how to harvest your losses the right way.
FAQs
Can I use crypto losses to offset stock market gains?
Yes. You can use cryptocurrency capital losses to offset gains from other assets, such as shares, real estate, or NFTs.
Do I need to sell all of my loss-making crypto to harvest the loss?
No. You can sell just part of your holdings to realise a partial loss and still benefit from tax relief.
Does tax-loss harvesting work for NFTs too?
Yes, but it depends on whether HMRC considers the NFT to be a chargeable asset. Some might be excluded because of their classification.
What if I don’t use my full loss this year?
You can carry the unused portion forward to offset future gains, as long as you report the loss in the year it occurred.
