How Do I Report Cryptocurrency on My Self Assessment

At Towerstone, we provide specialist crypto accountancy services for UK investors and businesses. We have written this article to explain where and how to report crypto activity, helping you understand the tax and reporting position.

From experience, this is one of the most anxiety-inducing questions people ask me about crypto. Many investors are comfortable buying, holding, swapping, and even using cryptocurrency, but when it comes to reporting it on a UK Self Assessment tax return, confidence disappears very quickly. In my opinion, this is not because people are trying to hide anything, but because the rules are unfamiliar, fragmented, and often explained in a way that feels more complex than it needs to be.

In this guide I am going to walk you through, step by step, how to report cryptocurrency on your UK Self Assessment return. I will explain when crypto needs to be declared, what tax applies, how HMRC expects figures to be calculated, which boxes to use, and the common mistakes I see in practice. Everything here is grounded in current UK guidance from HM Revenue and Customs and GOV.UK, and in real world experience of preparing and submitting crypto-heavy tax returns.

This is a long article by design. In my opinion, crypto tax is not something you should rush or guess. A clear, structured approach makes the process far less stressful and far less risky.

First Things First: Do I Even Need to Report Crypto?

Not everyone who owns cryptocurrency needs to report it on a Self Assessment return.

From experience, you generally need to report cryptocurrency if you have:

• Sold crypto for pounds or another fiat currency

• Swapped one cryptocurrency for another

• Spent crypto on goods or services

• Gifted crypto to someone other than your spouse or civil partner

• Received crypto as income, rewards, or payment

If you have only bought crypto and held it, with no disposals and no income, there is usually nothing to report yet.

In my opinion, this distinction is critical. HMRC does not tax ownership, it taxes events.

How HMRC Classifies Cryptocurrency

Before looking at forms and boxes, it is important to understand how HMRC views cryptocurrency.

HMRC treats cryptocurrency as an asset, not as money or foreign currency. This means crypto is taxed broadly under the same principles as shares.

From experience, this leads to two main tax categories:

• Capital Gains Tax for disposals

• Income Tax for crypto received as income

Your Self Assessment reporting depends entirely on which category your crypto activity falls into.

Capital Gains vs Income: The Most Important Split

In my opinion, this is the most important decision point in crypto tax reporting.

Crypto Usually Falls Under Capital Gains Tax When You:

• Sell crypto for pounds

• Swap one crypto for another

• Spend crypto

• Gift crypto

These are known as disposals.

Crypto Usually Falls Under Income Tax When You:

• Receive crypto for work or services

• Receive staking or mining rewards

• Receive certain airdrops

• Receive referral or incentive rewards

From experience, misclassifying income as capital or capital as income is one of the most common and expensive mistakes.

What Counts as a Disposal for Capital Gains Tax?

Many people think Capital Gains Tax only applies when they cash out to pounds. That is not correct.

HMRC treats the following as disposals:

• Selling crypto for GBP or another fiat currency

• Swapping Bitcoin for Ethereum

• Using crypto to buy goods or services

• Gifting crypto to anyone other than your spouse or civil partner

Each of these needs to be considered when calculating gains.

In my opinion, swaps are the biggest blind spot. People often do dozens or hundreds of swaps without realising each one is taxable.

How Capital Gains Are Calculated for Crypto

Capital Gains Tax is calculated based on the difference between what you paid for the crypto and what it was worth when you disposed of it.

For crypto, HMRC requires the use of pooling rules, similar to shares.

This involves:

• Pooling all units of the same crypto

• Calculating an average cost per unit

• Applying same day and 30 day matching rules first

From experience, this is where most DIY calculations go wrong.

The Section 104 Pool Explained

Each type of cryptocurrency has its own pool.

For example, all your Bitcoin purchases go into one pool, all your Ethereum purchases into another.

The pool keeps track of:

• Total units held

• Total allowable cost

When you dispose of crypto, you:

• Match same day acquisitions first

• Then acquisitions within the next 30 days

• Then use the pooled average cost

In my opinion, using software or professional help here is often sensible if transactions are frequent.

The Capital Gains Tax Allowance

Each individual has an annual Capital Gains Tax allowance.

If your total gains for the tax year are below this allowance, no CGT is payable, but reporting may still be required.

From experience, many people incorrectly assume that staying under the allowance means no reporting at all. That is not always true.

You generally need to report crypto gains if:

• Your total disposals exceed four times the annual allowance, or

• You have gains above the allowance

Where Capital Gains Go on the Self Assessment

Capital gains from crypto are reported in the Capital Gains Tax section of the Self Assessment return.

This includes:

• Total proceeds from disposals

• Total allowable costs

• Net gains or losses

• Losses brought forward

From experience, HMRC does not require you to list every transaction on the return itself, but you must keep detailed records in case they ask.

Reporting Crypto Losses

Losses are just as important as gains.

If you have made capital losses on crypto:

• They can be offset against gains in the same year

• Unused losses can be carried forward

From experience, many people fail to claim losses simply because they focus only on profitable trades.

In my opinion, this leads to unnecessary tax bills.

Income Tax and Crypto

Some crypto activity is taxed as income, not capital gains.

This includes:

• Mining income

• Staking rewards

• Crypto received for services

• Certain airdrops

In these cases, the value of the crypto in GBP at the time you receive it is treated as taxable income.

Where Crypto Income Goes on the Self Assessment

Crypto income is usually reported under:

• Other income

• Self employed income, if it forms part of a trade

The correct section depends on the nature and scale of the activity.

From experience, HMRC rarely accepts crypto income being ignored simply because it was paid in tokens rather than cash.

What Happens When Income Crypto Is Later Sold?

This is an area that causes confusion.

When crypto is taxed as income:

• The GBP value at receipt is taxed as income

• That same value becomes your acquisition cost for CGT

If you later sell or swap that crypto, Capital Gains Tax applies to any increase in value from that point.

In my opinion, this is an area where clear records are essential.

Record Keeping: What HMRC Expects

HMRC places heavy emphasis on record keeping for crypto.

You should keep:

• Dates of transactions

• Types of crypto involved

• Number of units

• GBP value at the time

• Wallet addresses

• Exchange statements

From experience, poor records are the single biggest trigger for HMRC enquiries.

Using Crypto Tax Software

Many people use crypto tax software to generate reports.

In my opinion, these tools are useful but not foolproof.

They often struggle with:

• Transfers between wallets

• Missing historical prices

• DeFi and NFT transactions

From experience, reports should always be reviewed rather than blindly trusted.

Crypto and the Self Assessment Deadline

Crypto must be reported in the same way as any other taxable income or gain.

Deadlines are:

• 31 January following the end of the tax year for online returns

• Same date for paying any tax owed

Interest and penalties apply for late filing or late payment.

What If I Forgot to Declare Crypto Previously?

This is a very common situation.

From experience, HMRC is far more understanding when people come forward voluntarily.

Options include:

• Amending previous Self Assessment returns

• Making a voluntary disclosure

In my opinion, doing nothing is almost always the worst option.

HMRC and Crypto Compliance

It is important to be realistic.

HMRC has significantly increased its focus on cryptocurrency, including:

• Data sharing with exchanges

• Targeted compliance campaigns

• Letters to known crypto users

In my opinion, transparency and accuracy are essential.

Common Mistakes I See in Practice

From experience, the most common errors include:

• Only reporting cash withdrawals

• Ignoring swaps

• Misclassifying income

• Incorrect pooling

• Missing losses

• Poor documentation

Each of these usually leads to either overpaying tax or underreporting it.

When You Should Get Professional Help

In my opinion, professional help is worth considering if:

• You have high transaction volumes

• You have used multiple exchanges

• You have DeFi or NFT activity

• You are unsure whether income or gains apply

• HMRC has contacted you

From experience, crypto tax gets complex quickly.

Practical Step by Step Summary

To report cryptocurrency on your Self Assessment, I recommend this approach:

• Identify all crypto transactions in the tax year

• Categorise each as income or capital

• Calculate gains using HMRC pooling rules

• Calculate income at GBP value on receipt

• Offset losses and allowances

• Complete the relevant Self Assessment sections

• Keep full supporting records

Breaking it down this way makes the process far more manageable.

The Emotional Side of Crypto Reporting

I want to acknowledge something important.

Many people feel anxious about crypto tax because they are worried they have already done something wrong. From experience, that anxiety often leads to avoidance.

In my opinion, the UK tax system is far more forgiving of mistakes than of silence. Honest reporting and correction go a long way.

Key Takeaways

So how do you report cryptocurrency on your Self Assessment? By understanding whether your activity is income or capital, calculating figures accurately, and reporting them in the correct sections with proper records.

From experience, crypto tax is rarely about trickery or loopholes. It is about applying existing tax rules to a new type of asset. Once you accept that, the process becomes far clearer.

In my opinion, the biggest risk is not paying too much tax, it is paying too little by mistake and facing penalties later. With a careful, structured approach, reporting crypto on your Self Assessment can be done accurately, confidently, and without unnecessary stress.

If you would like to explore related investing and crypto guidance, you may find How do I separate personal and business crypto transactions and How does Capital Gains Tax work on cryptocurrency useful. For broader investing context, visit our stocks and shares guidance hub.