Can I Move Crypto Between Wallets Without Paying Tax

Introduction

In the UK, cryptocurrency is treated as a capital asset for tax purposes. This means that selling, trading, or spending crypto can trigger Capital Gains Tax (CGT) if you make a profit. However, not every movement of crypto counts as a taxable event.

Simply moving your own crypto between wallets or exchanges does not create a gain or loss in itself, but there are still important tax and record-keeping rules you need to understand.

Moving crypto between your own wallets

If you transfer cryptocurrency between wallets that you personally own, you do not pay tax. HMRC views this as a transfer of ownership within the same person rather than a disposal or sale.

For example:

Moving Bitcoin from your hardware wallet to your exchange account.

Sending Ethereum from one of your wallets to another you control.

In both cases, no taxable event occurs because you are not disposing of or exchanging your crypto for another asset.

The same applies if you move your crypto between different exchanges, such as from Coinbase to Binance, provided you remain the owner.

Why record keeping still matters

Although wallet-to-wallet transfers are not taxable, you must keep records of every movement to prove that the coins remained under your ownership. This helps you:

Track the cost basis (the original purchase value) of your holdings.

Avoid confusion when calculating gains or losses later.

Demonstrate to HMRC that transfers were not sales or trades.

Keep a clear record showing:

The date and time of each transfer.

The amount and type of cryptocurrency moved.

The sending and receiving wallet addresses.

The purpose of the transaction (for example, “transfer between personal wallets”).

Most crypto portfolio tracking tools can automatically record wallet transfers to keep your records up to date.

When moving crypto can become taxable

Although personal wallet transfers are tax free, there are several scenarios where tax may apply:

1. Selling or exchanging crypto

If you sell cryptocurrency for cash or exchange it for another coin or token, this is treated as a disposal. HMRC requires you to calculate any capital gain or loss based on the difference between what you paid for the asset and its value when you sold or swapped it.

2. Paying for goods or services

Using cryptocurrency to buy something is considered a disposal, even if you never convert it back to pounds. For example, if you use Bitcoin to pay for a flight or a laptop, you must calculate any gain since purchase.

3. Transferring crypto to someone else

If you send crypto to another person (for example, as a gift), this is usually treated as a disposal for tax purposes. The market value at the time of the transfer is used to calculate any gain or loss. Gifts to your spouse or civil partner are an exception and can be transferred tax free.

4. Moving crypto between wallets you do not control

If you transfer coins to a wallet owned by someone else, even temporarily, HMRC could consider it a disposal. Similarly, if you use a third-party platform that takes ownership of your coins (for example, staking services or lending platforms), this could trigger a tax event depending on the terms of use.

5. Paying network or gas fees

When you move crypto between wallets, you often pay a small network fee (such as Ethereum gas fees). Although the transfer itself is not taxable, the fee may be deductible as an allowable cost when calculating future capital gains.

You should record these fees as they form part of your acquisition and disposal costs.

How to report crypto transactions

You only need to report to HMRC if you sell, trade, or dispose of cryptocurrency and make a gain that exceeds your Capital Gains Tax annual exemption, which is £3,000 for the 2024 25 tax year.

You can report crypto gains through your Self Assessment tax return using the Capital Gains Summary (SA108) form, or via HMRC’s real-time CGT reporting service.

If your transactions are frequent or complex, consider using crypto tax software to generate accurate reports.

Record keeping requirements

HMRC expects crypto investors to keep detailed records for every transaction, including wallet transfers, even if no tax is due. These records should include:

The type of asset.

The date of acquisition and disposal.

The amount in cryptocurrency and sterling.

The cumulative totals of units held and their cost basis.

Exchange or wallet details.

You should retain your records for at least five years after the Self Assessment submission deadline for the relevant tax year.

Example scenario

Sarah bought 1 Bitcoin for £20,000 and later moved it from her exchange wallet to her hardware wallet. She then transferred it to a mobile wallet for convenience.

None of these transfers are taxable because she still owns the Bitcoin.

Two years later, she sells the Bitcoin for £35,000. The taxable gain is calculated as £35,000 £20,000 = £15,000. She reports this to HMRC on her tax return and pays Capital Gains Tax on the £12,000 portion above the £3,000 annual exemption.

Common mistakes to avoid

Treating personal wallet transfers as taxable disposals.

Failing to keep records of wallet addresses and transfer details.

Forgetting that exchanging one crypto for another triggers CGT.

Assuming gifts to friends or relatives are tax free.

Ignoring gas fees that may affect your cost basis.

Conclusion

Moving cryptocurrency between wallets you own does not trigger Capital Gains Tax in the UK because it is not considered a disposal. However, you must maintain accurate records to prove ownership and track your cost basis for future transactions.

Tax only applies when you sell, swap, gift, or spend your crypto. Understanding these rules will help you stay compliant with HMRC and manage your digital assets confidently. For larger portfolios or complex activities such as staking or DeFi investments, consider seeking professional advice to ensure your tax reporting is accurate and complete.