Can I Offset Crypto Losses Against Other Investments

This guide explains how crypto losses can be offset against other investments including shares, property, funds, and how to claim losses with HMRC.

As more people invest in cryptocurrency, questions about how losses and gains are taxed have grown rapidly. One of the most common questions is whether crypto losses can be offset against gains from other investments such as shares, property, funds, ETFs, or other chargeable assets. The answer is yes. Crypto losses can usually be treated in the same way as losses from traditional investments but there are rules about how and when you can use them.

In my opinion crypto tax rules are far more straightforward than people expect once you understand that HMRC treats most cryptoassets in the same way as shares for Capital Gains Tax purposes. This makes it possible to offset losses across a wide range of investments as long as you follow the proper process.

This guide explains whether you can offset crypto losses, how the rules work, the difference between realised and allowable losses, the special rules for lost private keys and scams, how to carry forward unused losses, and how to report everything correctly so you can reduce your future Capital Gains Tax.

Does HMRC Allow Crypto Losses to Be Offset Against Other Investments

The simple answer

Yes. Crypto losses can be used to offset gains from other investments because HMRC treats cryptocurrency as a chargeable asset for Capital Gains Tax.

This means crypto is grouped in the same tax category as:

  • Shares

  • ETFs

  • Unit trusts

  • Investment funds

  • Precious metals

  • Property that is not your main home

  • Collectibles above the chattel limit

  • Other financial assets

If you dispose of crypto at a loss, that loss counts as a capital loss. Capital losses can be used to reduce capital gains from any other chargeable asset in the same tax year.

How Offsetting Crypto Losses Works in Practice

Step 1: Dispose of the crypto

You must dispose of the crypto to crystallise the loss. Disposal includes:

  • Selling crypto

  • Swapping one cryptoasset for another

  • Spending crypto

  • Gifting crypto except to a spouse

  • Using crypto to buy other assets

Crypto losses cannot be used until they are crystallised. Holding coins that have dropped in value does not create a loss for tax purposes.

Step 2: Calculate the loss

A loss is:

Allowable cost minus disposal proceeds

Allowable costs include:

  • Purchase price

  • Transaction fees

  • Gas fees

  • Transfer fees

  • Some exchange charges

You use the share pooling rules to calculate cost basis, the same method used for shares.

Step 3: Offset the loss against gains

You can offset the crypto loss against:

  • Gains from shares

  • Gains from property (excluding main home)

  • Gains from funds or ETFs

  • Gains from selling valuable possessions

  • Gains from other cryptoassets

This reduces your total taxable gain for the tax year.

Step 4: Use the annual CGT allowance

If your total gains fall below the annual allowance after offsetting losses, you may owe no Capital Gains Tax.

Step 5: Carry forward unused losses

If your losses exceed your gains, you can carry them forward indefinitely.

What Gains Can Crypto Losses Be Used Against

Crypto losses can be used against almost any other capital gain including:

1. Share sales

If you sell shares in a general investment account for a profit, crypto losses reduce your taxable gain.

2. Investment funds

Losses can offset gains from selling fund units.

3. Buy to let property

If you sell a rental property for a gain, crypto losses reduce the taxable profit.

4. Precious metals

Gold, silver, and other chargeable assets can generate taxable gains.

5. NFTs

Gains and losses on NFTs count as capital gains. They are offsettable.

6. Other crypto

Losses from one type of crypto can offset gains from another type.

7. Gains from selling a business

If a business sale triggers CGT, crypto losses can sometimes be used unless the gain qualifies for Business Asset Disposal Relief.

Crypto losses cannot be offset against income tax. They only offset capital gains.

In my opinion this creates huge planning opportunities for investors who trade multiple asset types.

When Crypto Losses Do Not Count as Allowable Losses

HMRC allows the majority of genuine losses but some situations do not qualify automatically.

1. You have not disposed of the asset

An unrealised loss does not count. Holding crypto that has dropped in value is not an allowable loss.

2. You still possess the private keys but cannot access the crypto

This may qualify for a negligible value claim but does not count as a disposal on its own.

3. You lost crypto due to negligence

For example losing a hardware wallet without backups. You may be able to make a negligible value claim but cannot count it as an automatic loss.

4. Scams

If you transfer crypto into a scam you must evidence the disposal. If the asset you received in return has negligible value you may be able to make a negligible value claim.

5. Exchange collapse without a disposal

If an exchange fails and you cannot withdraw assets you may need to make a negligible value claim rather than declaring an immediate loss.

Using a Negligible Value Claim to Create a Loss

A negligible value claim is used when the crypto still exists in theory but is worthless or inaccessible.

You can make a claim when:

  • The private key is lost permanently

  • The exchange holding the asset collapses

  • You receive crypto in a scam that has no value

  • The token still exists but is effectively worth zero

A successful negligible value claim allows HMRC to treat the asset as if you disposed of it for zero.

This crystallises a loss which can then be offset against other gains.

How Crypto Losses Affect Your Annual CGT Allowance

The annual CGT allowance is £3,000. You apply your losses before this allowance.

Example

Share gain: £8,000
Crypto loss: £6,000
Net gain: £2,000
Annual allowance: £3,000
Taxable gain: £0

You owe no CGT.

If your losses exceed your gains:

  • You use them to reduce gains to zero

  • The remaining losses carry forward

You cannot use losses to increase your annual allowance or convert them to income tax relief.

How to Carry Forward Crypto Losses

Crypto losses can be carried forward indefinitely provided you:

  • Claim the loss in the correct tax year

  • Report it on your Self Assessment
    or

  • Notify HMRC in writing within four years

You can carry forward:

  • Realised losses

  • Negligible value claim losses

  • Losses from previous investments

These carried forward losses can be used in future years whenever you have gains.

How to Report Crypto Losses to HMRC

You can report crypto losses in three ways:

1. Self Assessment tax return

You enter:

  • Disposal proceeds

  • Allowable costs

  • Gain or loss

  • Number of negligible value claims

The loss is carried forward automatically.

2. HMRC real time CGT reporting

Used for gains on assets like property but can also report losses.

3. Written notification

If you do not need to file a Self Assessment you can write to HMRC within four years to record the loss.

In my opinion it is always best to keep evidence such as:

  • Transaction history

  • Exchange statements

  • Wallet records

  • Valuation screenshots

  • Correspondence about scams or collapses

HMRC may request proof.

Detailed Examples

Example 1: Offsetting crypto losses against shares

Crypto loss: £12,000
Share gains: £20,000
Net gain: £8,000
Annual allowance: £3,000
Taxable gain: £5,000
You pay CGT only on £5,000 instead of £20,000.

Example 2: Loss exceeds gain

Crypto loss: £15,000
Share gain: £2,000
Net loss: £13,000
Taxable gain: £0
Carry forward: £13,000
Future gains reduced.

Example 3: Offsetting against rental property gain

Crypto loss: £7,000
Buy to let gain: £18,000
Net gain: £11,000
After allowance = £8,000 taxable
CGT reduced significantly.

Example 4: Negligible value claim

Exchange collapses with £4,000 of crypto stuck.
You claim negligible value.
Loss of £4,000 crystallised.
Offset against gains in the same year.

Example 5: Serial investor

Crypto loss over five years: £40,000
Future gains from shares: £35,000
Losses offset the gains leaving £5,000 remaining loss.

Common Misunderstandings

“Crypto losses are treated differently to shares”

Incorrect. They follow the same CGT rules.

“I can offset crypto losses against income tax”

Incorrect. Only capital gains.

“I can claim a loss without selling the crypto”

Incorrect unless using a negligible value claim.

“I can only offset crypto against crypto”

Incorrect. You can offset across most chargeable assets.

“If I was scammed I cannot claim a loss”

You may be able to with proper evidence.

“Losses expire after a few years”

Incorrect. You can carry them forward indefinitely if claimed correctly.

Final Thoughts

Yes, you can offset crypto losses against gains from shares, property, funds, or other investments. HMRC treats crypto like any other investment asset for Capital Gains Tax which gives you flexibility when balancing gains and losses across your portfolio. The key is ensuring the loss is crystallised through a disposal or negligible value claim, reporting it correctly, and carrying forward any unused losses for future years.

In my opinion anyone who invests in multiple asset types should review their overall capital gains position each year. Offsetting crypto losses can considerably reduce your tax bill and protect profits from other investments.