As crypto continues to grow, so does the interest of tax authorities. If you’re involved in trading, staking, mining, or even just receiving crypto through airdrops or gifts, you need to know what’s taxable.
Whether you’re based in the United Kingdom or the United States, this guide will help you understand what counts as a taxable crypto event, so you can stay compliant and avoid trouble with HMRC or the IRS.
🇬🇧 Crypto Tax Rules in the UK
1. Trading & Swapping Crypto
In the UK, HMRC treats crypto as property, not currency. So whenever you sell, swap, or use crypto, you’re potentially making a taxable disposal.
Examples of taxable events in the UK:
- Selling Bitcoin for GBP
- Swapping Ethereum for Solana
- Using crypto to buy products or services
📌 These actions could trigger Capital Gains Tax (CGT). Track the acquisition cost (cost basis) and the selling price in GBP.
2. Staking Crypto
Staking rewards can be taxed in two ways:
- As income is a passive reward
- As trading income, if you’re running a staking business
Also, if you lock your crypto in a staking contract where you lose control, that might be considered a disposal, triggering CGT.
3. Mining Crypto
HMRC distinguishes between hobby mining and business mining:
- Hobby miners: Report rewards as miscellaneous income and pay CGT when selling the mined coins.
- Business miners: Must report mining as trading income, subject to Income Tax and National Insurance.
4. Airdrops
Not all airdrops are taxed the same:
- Received with no effort (e.g., promotional drops): Not taxed when received, but Capital Gains Tax applies when you sell them.
- Received in exchange for a service or effort: Taxed as income when received and CGT applies when sold.
5. Gifting Crypto
- To anyone (except a spouse): It’s a taxable disposal, and CGT applies based on the market value.
- To a spouse or civil partner: No immediate tax — the recipient inherits your original cost basis.
- To a charity: Usually tax-free if there’s no personal gain.
🇺🇸 Crypto Tax Rules in the USA
1. Trading & Using Crypto
The IRS treats cryptocurrency as property, which means:
Taxable events in the USA include:
- Selling crypto for USD
- Trading one crypto for another
- Using crypto to pay for goods or services
📌 These actions result in capital gains or losses based on your cost basis and sale value.
2. Staking Crypto
All staking rewards are taxable income at the fair market value when you receive them. Later, when you sell that crypto, you’ll pay Capital Gains Tax on any profit.
3. Mining Crypto
Like the UK, the IRS separates hobby miners from those doing it as a business:
- Hobby mining: Report rewards as ordinary income; CGT applies when you sell.
- Business mining: Income is subject to income tax + self-employment tax; business expenses can be deducted.
4. Airdrops
If you receive an airdrop:
- It’s taxed as ordinary income at its value when you receive it.
- Later, when you sell it, you pay Capital Gains Tax on any increase in value.
5. Gifting Crypto
- Under $18,000 (2024): No gift tax.
- Over $18,000: You must file a gift tax return, but no tax unless you exceed your lifetime exemption ($13.61 million in 2024).
- The recipient doesn’t pay tax right away, but will pay capital gains tax when they sell.
🔍 Summary Table: Taxable Crypto Events in UK & USA
🧠 Final Tips to Stay Compliant
- Keep detailed records: Track all your crypto transactions, wallet addresses, and prices in GBP/USD.
- Use crypto tax software: Tools like Koinly, TokenTax, or CoinTracker can simplify reporting.
- Consult a tax advisor: Especially if you’ve had large gains or complex transactions.
💡 Want to simplify your crypto taxes?
Check out CryptoTax.Live — your go-to platform for easy crypto tax tools, calculators, and tips tailored for UK and US users.
