Last updated on 13 October 2026
You can use your £3,000 Capital Gains Tax CGT Allowance to reduce or even eliminate tax on profits made from crypto in the UK.
If you’re investing or trading in cryptocurrency, the UK tax system expects you to report your gains. But here’s the good news: the first £3,000 of capital gains you make each tax year is tax-free, thanks to the annual CGT Allowance.
While that figure was reduced from £6,000 in April 2024, it’s still something you can plan around if you are making modest gains or spreading your sales across multiple tax years.
What is Capital Gains Tax?
Capital Gains Tax is the tax you pay when you sell something valuable, like property, shares, or cryptocurrency, for more than you paid. You are only charged on the gain, not the whole amount you get.
For example, if you buy £2,000 worth of Bitcoin and later sell it for £5,000, your gain is £3,000. If that happens in the same tax year and you have not used up your CGT Allowance, you might pay no tax.
The £3,000 CGT Allowance (2026/27)
In the 2026/27 tax year, every individual in the UK has a £3,000 tax-free CGT allowance. This means:
- You are exempt from paying CGT on capital gains up to £3,000.
- Gains over £3,000 are taxed at 18% while they fit within your unused basic rate band, and at 24% above it.
This allowance used to be much higher, £12,300 in 2022/23, but has been steadily reduced by the government. So, while it’s still useful, smart planning is now more important than ever.
How Does This Apply to Crypto?
HMRC treats cryptocurrency as a capital asset, similar to shares or property. This means any time you:
- Sell crypto for cash (like pounds or dollars),
- Exchange one cryptocurrency for another (ETH to SOL, for example).
- Use cryptocurrency to purchase products or services.
- Giving cryptocurrency as a gift could result in a capital gains event, unless it’s to a spouse or civil partner.
Let’s say:
- You bought 1 Ethereum for £1,500.
- You sold it a few months later for £2,700.
- Your gain is £1,200.
If your total gains for the tax year stay under £3,000, you won’t owe any tax. But you still need to report it if your total disposals (the amount you sold, not just the profit) go over £50,000 in the year.
How to Make the Most of the £3,000 CGT Allowance in Crypto
1. Time Your Sales
If your crypto has increased a lot in value, consider selling only enough each year to stay within the £3,000 allowance. This is called “crystallising gains“.
For example, if you have £10,000 worth of gains, you could:
- Sell enough this year to use the £3,000 allowance,
- Sell more in the next tax year to use the next £3,000.
Over time, this might drastically lower your tax liability.
2. Use Your Spouse’s Allowance
Each person gets their own £3,000 allowance. If you’re married or in a civil partnership, you can gift crypto to your spouse tax-free, and they can sell it using their own CGT Allowance.
This effectively doubles your household allowance to £6,000 per year.
3. Offset Your Losses
Lost money on a crypto trade? You can claim those losses and use them to offset your gains. However, you must notify HMRC of them, some examples include:
- Gain from selling ETH: £3,500
- Loss from selling ADA: £1,000
- Net gain: £2,500, under the allowance, so no tax owed
Keep good records of every trade, even the losing ones. They might assist you in avoiding the taxed threshold.
Important Tips to Remember
We recommend keeping in mind these tips:
1- Keep Detailed Records
You must maintain thorough and accurate records of every cryptocurrency transaction you make, per HMRC regulations. This comprises:
- The date of the asset’s acquisition (airdrop, gift, or purchase).
- When did you sell, trade, spend, or give it away?
- The sum received or paid in each instance.
- The cryptocurrency’s worth in pounds sterling for each transaction.
- The amount of any associated fees or commissions (these can reduce your gain).
- The wallet addresses or exchange accounts involved.
- The purpose of the transaction (was it an investment, a gift, a payment?).
Even moving crypto between your own wallets or exchanges does not trigger CGT, but you still need to record it; HMRC may ask you to prove it wasn’t a disposal.
HMRC may ask for these records for previous tax years, so keep them for at least six years.
2- Track Everything in GBP
Capital gains are always calculated in pounds sterling, not in crypto values or USD. Therefore, even if you purchased Bitcoin on a foreign exchange, you must:
- Convert the crypto price to GBP at the time of the transaction using a reliable source (like CoinGecko or the exchange rate on your platform).
- Do this for every transaction, even if you’re just swapping one token for another.
You trade £500 worth of BTC for ETH. You’ll need to record the GBP value of the BTC you gave up and the GBP value of the ETH you received. This trade may trigger a capital gain or loss.
3- Use Crypto Tax Software
Tracking dozens or hundreds of trades manually can be time-consuming and error-prone. Dedicated crypto tax software can help by automating the process. They typically:
- Sync with your Exchange accounts and wallets.
- Pull in your transaction history.
- Automatically calculate gains, losses, and the CGT you owe.
- Separate short-term and long-term holdings.
- Generate HMRC-compatible tax reports.
Some popular options for UK users include:
- Koinly is widely used, UK-specific tax settings, integrates with major exchanges and wallets.
- CoinTracker is very user-friendly, good for multi-asset portfolios.
Most of these tools offer free tiers for small users and paid plans for high-volume traders.
Final Thoughts
The £3,000 cgt allowance may not sound like much, but if used wisely, it can save you hundreds of pounds in tax. Crypto is now firmly in HMRC’s sights, and understanding how capital gains rules apply to your digital assets is essential.
If you are unsure how your crypto gains are taxed or need help with your CGT reporting, speak to the Crypto Accountants today.
FAQs
Do I have to report my crypto trades if I made less than £3,000?
You might still need to report them if your total disposals are more than £50,000 in the year, even if your gains are under £3,000.
What if I didn’t sell any crypto this year?
If you haven’t sold, traded, or spent your crypto, you haven’t made a “disposal,” and no CGT applies yet. Holding alone doesn’t trigger tax.
Can I carry forward unused CGT Allowance?
No. If you don’t use your £3,000 allowance in a given tax year, it doesn’t roll over. Make use of it or lose it.
What happens if I lose money on my cryptocurrency?
To lower your gains in subsequent years, you can record the loss to HMRC and carry it forward.
