Bitcoin CGT and Self Assessment: A Step-by-Step Guide

Every factual statement below is drawn from HMRC's published guidance on gov.uk and cited to it. The sources are listed in full at the end.

Why Bitcoin Is a Capital Asset, Not Currency

HMRC's Cryptoassets Manual states: "HMRC does not consider cryptoassets to be currency or money" (CRYPTO10100).

The manual describes exchange tokens, of which it gives bitcoin as the example, as intended for use as a means of payment and as an investment. It also makes clear that the tax treatment of any token "depends on the nature and use of the token and not the definition of the token".

The practical consequence is that the capital gains rules apply: pooling, the same day rule, the 30 day rule, and the requirement to report gains above the annual exempt amount.

What Counts as a Disposal

HMRC lists the ways you dispose of cryptoasset tokens as "selling them", "exchanging them for a different type of cryptoasset", "using them to pay for goods or services", and "giving them to another person", excluding gifts to your spouse or civil partner and gifts to charity (Check if you need to pay tax when you sell cryptoassets).

The exchange category is the one that surprises people. Swapping BTC for ETH is an exchange for a different type of cryptoasset, so it is a disposal of the BTC, and a gain can arise even though you never received a pound.

Moving Bitcoin between wallets you own is not on HMRC's disposal list. You still need the records, because HMRC states that "You must keep your own records of your transactions".

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A Worked Example: Calculating Your Gain

Suppose you bought 0.5 BTC in March 2024 for a total of £20,000 including exchange fees, and you sell that 0.5 BTC in November 2025 for £25,000.

Step 1: Identify proceeds: £25,000

Step 2: Identify allowable cost: £20,000, being "the consideration (in pound sterling) originally paid for the asset" plus the transaction fee (CRYPTO22150)

Step 3: Calculate the gain: £25,000 − £20,000 = £5,000

Step 4: Apply the annual exempt amount: HMRC gives "£3,000" for individuals for the 2025 to 2026 tax year, so £5,000 − £3,000 = £2,000 of taxable gain (Capital Gains Tax rates and annual tax-free allowances)

Step 5: Calculate the tax. For assets other than residential property disposed of between 6 April 2025 and 5 April 2026, HMRC gives "18% and 24% for individuals":

At 18%: £2,000 × 18% = £360
At 24%: £2,000 × 24% = £480

Which rate applies depends on your income. HMRC's rates page states that a basic rate taxpayer pays 18% on gains within the basic Income Tax band and 24% above it, and that a higher rate taxpayer pays 24% (Capital Gains Tax rates).

This is a clean example: one purchase, one sale, no other disposals in the year. Most people's situations are messier, which is where pooling comes in.

Allowable Costs: What You Can Deduct

HMRC's Cryptoassets Manual lists the allowable costs under section 38 TCGA 1992 as:

"the consideration (in pound sterling) originally paid for the asset"
"transaction fees paid for having the transaction included on the distributed ledger"
"advertising for a purchaser or a vendor"
"professional costs to draw up a contract for the acquisition or disposal of the tokens"
"costs of making a valuation or apportionment to be able to calculate gains or losses"

(CRYPTO22150)

What You Cannot Deduct

The same page lists what is not allowable:

Any cost already deducted against profits for Income Tax purposes
Mining equipment and electricity, because they do not satisfy the requirement to be "wholly and exclusively" for acquiring the tokens
Sterling deposited with an exchange, because sterling is not an asset for CGT
Deposits of non-sterling fiat currency, where no acquisition or disposal occurs
Withdrawals from an exchange

The pattern is that only costs tied to a specific acquisition or disposal are deductible. General running costs of holding Bitcoin are not.

HMRC states that "Each type of token will need its own pool. For example, if a person owns bitcoin, ether and litecoin they would have three pools and each one would have its own 'pooled allowable cost' associated with it" (CRYPTO22200).

Each buy adds to the pool. Each sale draws from it at the current average cost.

Example:

April 2023: buy 0.3 BTC for £9,000. Pool: 0.3 BTC, total cost £9,000, average £30,000 per BTC.
January 2025: buy 0.2 BTC for £7,000. Pool: 0.5 BTC, total cost £16,000, average £32,000 per BTC.
June 2025: sell 0.1 BTC for £4,500. Allowable cost: 0.1 × £32,000 = £3,200. Gain: £4,500 − £3,200 = £1,300.

After the sale, the pool holds 0.4 BTC at a total cost of £12,800, an average of £32,000 per BTC.

Averaging means your gain on any individual sale reflects your overall average purchase price. You cannot pick out a high-cost purchase to reduce a particular gain.

One exception: "Non-Fungible Tokens (NFTs) are separately identifiable and so are not pooled and no matching rules are applied" (CRYPTO22200).

The Same-Day and 30-Day Rules

Two matching rules run before the pool calculation. HMRC applies the same day rule under TCGA1992/S105 and the 30 day rule under TCGA1992/S106A. Where an individual "disposes of tokens and then acquires, in the same capacity, tokens of the same type within the next 30 days", the same day rule is applied first, and the tokens caught by the 30 day rule are matched against the earlier disposal instead of going into the pool (CRYPTO22200).

HMRC adds that where the quantity acquired exceeds the quantity disposed of, the excess goes into the section 104 pool, and where the quantity disposed of exceeds the quantity acquired, the excess is treated as a disposal from the pool.

Selling near the tax year end and buying straight back in therefore does not reset your cost basis. If you sell on 28 March 2026 and buy again on 5 April 2026, those transactions are matched against each other. A sale on 3 April 2026 and a repurchase on 8 April 2026 also falls inside the 30 day window, even though the dates straddle two tax years.

Reporting on Self Assessment

HMRC gives two routes: "completing a Self Assessment tax return at the end of the tax year" or "using the Capital Gains Tax real time service". It confirms that "Self Assessment returns now include a cryptoasset section", available from the 2024 to 2025 tax year onwards (Check if you need to pay tax when you sell cryptoassets).

HMRC's record list for cryptoassets covers the type of token, the date of disposal, the number of tokens disposed of, the number remaining, the pound sterling value, bank statements, and the pooled costs before and after the disposal. Keep a disposal-by-disposal breakdown even though you do not send it in with the return.

Key Deadlines

For the 2025/26 tax year, which HMRC states "started on 6 April 2025 and ended on 5 April 2026":

5 October 2026: "You must tell HMRC by 5 October if you need to complete a tax return for the previous year". Register at gov.uk/register-for-self-assessment.
31 October 2026: "HMRC must receive your paper tax return by 11:59pm on 31 October 2026"
31 January 2027: "You must submit your online tax return by 11:59pm on 31 January 2027" and "You need to pay your Self Assessment tax by 11:59pm on 31 January 2027"

(Self Assessment tax returns: deadlines)

Filing late attracts "an initial £100 penalty", rising with "additional daily penalties of £10 per day, up to a maximum of £900" after three months. Paying late attracts penalties of "5% of the tax unpaid at: 30 days, 6 months, 12 months", and HMRC adds: "You'll also be charged interest on the amount owed" (Self Assessment tax returns: penalties).

If you have Bitcoin gains from previous tax years that you have not declared, see our guide on HMRC crypto compliance letters for how voluntary disclosure works.

Crypto Tax Software Worth Knowing

Calculating gains by hand across a year of trades is tedious and error-prone. Three tools built around UK rules are commonly used:

Koinly: connects to most exchanges and wallets by API or CSV and applies UK pooling rules. koinly.io
Recap: UK-built, covers the section 104 pool and the 30 day rule. recap.io
BittyTax: open-source, licensed under AGPLv3, and run from the command line rather than a browser. github.com/BittyTax/BittyTax

None of these is a substitute for reviewing your figures with a qualified tax adviser, particularly with a complex trading history, DeFi activity, or years of unreported gains.

This guide is for general information only and does not constitute tax advice. Tax rules change and individual circumstances vary. Always consult a qualified tax adviser before making decisions about your tax position. Nothing on this website creates a professional relationship.

Sources

Last reviewed: 27 July 2026.

Quoted HMRC material contains public sector information licensed under the Open Government Licence v3.0.

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