Do I Have to Pay Tax on Crypto Gifted from Abroad

Introduction

Cryptocurrency gifts are becoming more common, especially as more people hold digital assets internationally. In the UK, tax treatment of gifted crypto depends on who gives it, where they live for tax purposes, and what you do with the crypto after receiving it.

While receiving a crypto gift is usually tax free, you may still face a tax charge later if you sell, exchange, or spend it.

Receiving crypto as a gift from abroad

If someone outside the UK sends you cryptocurrency as a genuine gift, you do not pay tax at the time of receiving it. HMRC does not treat gifts as income unless they are part of your employment or payment for services.

This means:

You do not pay Income Tax when you receive the crypto.

The sender (the person abroad) may face tax in their country, but that does not affect your UK position.

However, once you own the crypto, it becomes part of your assets for UK tax purposes. If you later sell, trade, or spend it, you may have to pay Capital Gains Tax (CGT) on any profit you make.

Capital Gains Tax when you dispose of the gift

In the UK, tax applies when you dispose of cryptocurrency, not when you receive it. Disposal includes:

Selling the crypto for fiat currency (for example, pounds or dollars).

Exchanging it for another cryptocurrency.

Spending it on goods or services.

Gifting it to someone else (except your spouse or civil partner).

When you sell or dispose of crypto that was gifted to you, HMRC calculates CGT based on the market value of the crypto at the time you received it.

Example

Sarah’s uncle in Canada gifts her 1 Bitcoin in January 2020 when it is worth £6,000. She sells it in 2024 for £30,000.

Her capital gain is £30,000 £6,000 = £24,000.
She must report this to HMRC and pay CGT on the £21,000 that exceeds her annual CGT allowance (£3,000 for the 2024 25 tax year).

Even though she paid no tax when she received the Bitcoin, she is liable for tax on the profit when she sells it.

Inheritance and large overseas gifts

If you receive a large gift from abroad and the person who gave it dies within seven years, their estate could potentially be liable for Inheritance Tax in their country, depending on local laws.

However, as the recipient in the UK, you would not pay Inheritance Tax on the gift itself. Your only UK tax obligation arises later if you sell the crypto and make a gain.

If the donor is UK domiciled for tax purposes, HMRC could include the gift in their UK estate for Inheritance Tax, but this affects the giver, not the recipient.

Record keeping

When you receive cryptocurrency as a gift, especially from abroad, keep detailed records. HMRC requires you to maintain evidence of:

The date you received the gift.

The market value of the crypto in sterling on that date.

The name and tax residence of the person who gave it to you.

The blockchain transaction ID or wallet addresses involved.

This information will be vital when you later sell or exchange the crypto because it establishes your cost basis for Capital Gains Tax calculations.

Without these records, HMRC may estimate the value of the gift, which could result in a higher tax bill.

Gifts that count as income

While gifts from individuals are not taxable, you may owe Income Tax if the crypto was received as:

Payment for work or services.

Airdrops received in exchange for completing tasks.

Rewards or staking income from crypto platforms.

In these cases, HMRC treats the crypto’s value as income at the time you receive it. You may also have to pay CGT later if the crypto increases in value before you sell it.

Reporting crypto to HMRC

If you sell or trade your gifted cryptocurrency and make gains above your annual allowance, you must report them to HMRC.

You can do this either:

Through your Self Assessment tax return by completing the Capital Gains Summary (SA108), or

Using HMRC’s real-time Capital Gains Tax service online.

For most people, the deadline for reporting and paying CGT is 31 January following the end of the tax year.

How foreign exchange rates affect your tax

Crypto values fluctuate constantly, and HMRC requires all figures to be reported in pounds sterling.

If you receive crypto from abroad, you must convert the value into GBP using a reliable exchange rate at the time of receipt. The same applies when calculating gains at the point of disposal.

Using consistent and verifiable conversion rates is essential to avoid disputes with HMRC over valuation.

Example scenario

Daniel’s friend in the United States sends him 5 Ethereum as a gift in February 2021, worth £1,000 each at the time (£5,000 total).

He sells all 5 Ethereum in July 2024 when they are worth £2,000 each (£10,000 total).

His gain is £5,000 (£10,000 £5,000). This is below his £3,000 CGT allowance for 2024 25, so he only pays tax on £2,000 at his CGT rate (10 or 20 percent, depending on his income bracket).

Daniel owes no tax for receiving the gift, only for the profit made when he sells the Ethereum.

Common mistakes to avoid

Assuming crypto gifts are always tax free when sold.

Forgetting to record the value of the crypto when received.

Misreporting the gain because of incorrect currency conversion.

Failing to distinguish between a genuine gift and income from work or staking.

Conclusion

You do not pay tax when receiving cryptocurrency as a genuine gift from abroad, but you may owe Capital Gains Tax later when you sell or exchange it. HMRC treats gifted crypto like any other capital asset, and your taxable gain is based on its value when received.

By keeping detailed records and understanding when tax applies, you can stay compliant and avoid surprises. If the amounts involved are large or if you receive crypto regularly from overseas, consider seeking advice from a tax professional familiar with cryptocurrency and cross-border taxation.