Do I Need to Declare Crypto If I Only Made a Small Profit

How HMRC taxes cryptocurrency

HMRC does not view cryptocurrency as money but as a chargeable asset. This means most people are taxed under Capital Gains Tax (CGT) rules, similar to shares or property.

You may need to pay CGT when you dispose of crypto by:

Selling it for fiat currency such as pounds or dollars

Swapping one cryptocurrency for another

Spending crypto to buy goods or services

Gifting it to anyone other than your spouse or civil partner

The gain is calculated by taking the difference between what you paid for the asset and what you received when disposing of it, after deducting any allowable costs such as transaction fees.

The Capital Gains Tax allowance for crypto

Everyone in the UK receives an annual Capital Gains Tax allowance, known as the Annual Exempt Amount. For the 2025 26 tax year, the allowance is £3,000.

If your total net gains from all chargeable assets, including crypto, are less than £3,000, you will not have to pay any CGT.

However, this does not automatically mean you can ignore HMRC reporting.

If your total proceeds (the total value of all crypto sold or exchanged) exceed £50,000 in a tax year, you must still report your transactions to HMRC, even if the net gain is below the £3,000 allowance.

Example

You sold various crypto holdings worth £45,000 in total and made a gain of £2,000.
You do not need to report this to HMRC as your gain is below the £3,000 allowance and your total disposals are under £50,000.

You sold crypto worth £60,000 and made a gain of only £1,000.
Even though the gain is small, you must still report it because your total disposals exceed the £50,000 threshold.

When you must declare small profits

You must declare your crypto activity to HMRC if:

Your total gains exceed the £3,000 annual CGT allowance.

Your total sales or disposals of crypto in the year exceed £50,000, even if your gains are small or zero.

You received crypto from mining, staking, airdrops, or employment, which may count as income.

You made any gain and HMRC has specifically asked you to complete a Self Assessment tax return.

In these cases, you must declare your crypto gains by filing a tax return and calculating your capital gains and losses for the year.

When you do not need to declare

You do not need to declare your crypto transactions if:

Your total gains from all assets, including crypto, are below the £3,000 allowance.

Your total disposals in the year are less than £50,000.

You did not sell, exchange, or spend any crypto during the tax year.

Simply holding or buying cryptocurrency does not create a taxable event. HMRC only taxes you when you dispose of it.

Small profits from income-based crypto activities

If you earn cryptocurrency through mining, staking, airdrop rewards, or employment, the rules are different.

These activities may be treated as income rather than capital gains. If so, the value of the crypto at the time you receive it must be declared as part of your taxable income.

Even if the amount earned is small, it should still be reported if your total income, including other sources, exceeds your personal allowance (currently £12,570).

If your crypto income is below this level and you do not complete a tax return for other reasons, HMRC is unlikely to require one, but you should keep full records in case your situation changes later.

Why declaring small profits can still help

Even if your profits are under the allowance, it can still be beneficial to declare your crypto activity. Doing so:

Builds a record with HMRC and reduces the risk of investigation.

Allows you to register and carry forward any losses to offset against future gains.

Demonstrates transparency, which can be useful if HMRC queries your tax history.

For example, if you make a £500 gain this year and a £10,000 gain next year, you will be able to deduct any previous losses only if you reported them.

Keeping records of small crypto transactions

Whether or not you need to declare, HMRC requires you to keep detailed records of all crypto transactions. You should record:

Dates of acquisition and disposal

Amounts paid and received

Transaction fees

Wallet and exchange information

The pound sterling value at the time of each transaction

Good record keeping makes it easier to calculate gains accurately and to prove your figures if HMRC requests evidence.

How to report small crypto gains

If you need to declare your crypto profits, you can do so via your Self Assessment tax return.

Include details of:

Each crypto disposal

The cost of acquisition

Allowable expenses

Any capital losses carried forward

HMRC also offers a real-time Capital Gains Tax service, allowing you to report smaller gains online as they occur, rather than waiting for the end of the tax year.

What happens if you do not declare

Failing to declare taxable crypto gains can result in penalties and interest if HMRC discovers undeclared income or capital gains. Even small omissions can lead to fines if they are deemed careless or deliberate.

HMRC uses data from UK-based and international exchanges to identify users and cross-check tax returns. Reporting voluntarily, even for small gains, helps you avoid unnecessary scrutiny.

Final thoughts

Even if your crypto profit is small, you may still need to declare it depending on your total disposals and how you earned the crypto. While you won’t pay tax if your gains are below the £3,000 allowance, reporting them builds transparency, protects future tax reliefs, and ensures compliance.

If you are unsure whether you need to declare, or if your crypto activity includes mining or staking, it is best to speak with a tax professional familiar with cryptocurrency. Accurate reporting now helps you avoid penalties later and keeps your tax affairs completely in line with HMRC expectations.