What Happens If My Crypto Exchange Is Based Outside the UK

HMRC’s View on Overseas Crypto Exchanges

HMRC treats all cryptocurrency activity by UK residents as taxable under UK law, no matter where the exchange or wallet is located.

If you live in the UK and use an overseas crypto platform, your trades, gains, and income are still subject to UK tax. This includes:

• Capital Gains Tax (CGT) on profits from selling, trading, or spending crypto.

• Income Tax on rewards from staking, mining, airdrops, or earning crypto as payment.

The key factor is your tax residency, not the exchange’s location. HMRC’s crypto tax rules apply to all UK residents, whether they use a domestic or foreign platform.

Overseas Exchanges Still Report to HMRC

Many crypto investors assume that HMRC cannot access information from non-UK exchanges. In reality, tax authorities around the world are increasingly sharing data about crypto transactions.

Through international agreements such as the Common Reporting Standard (CRS) and the Crypto-Asset Reporting Framework (CARF) developed by the Organisation for Economic Co-operation and Development (OECD), HMRC can receive information from exchanges operating abroad.

Under these agreements, overseas exchanges may share details including:

• Account holder names and contact information.

• Transaction histories and wallet addresses.

• Fiat deposits and withdrawals.

• Total crypto holdings and valuations.

This means HMRC can identify UK taxpayers who trade on overseas exchanges and check whether they have declared their crypto income or gains.

Tax Responsibilities for UK Residents Using Overseas Exchanges

If you are a UK tax resident, you must report all taxable crypto activity, even if it occurs on an exchange based outside the country. This includes:

• Profits from selling or exchanging cryptoassets.

• Income from staking, mining, or referral rewards.

• Gains made when converting crypto to stablecoins or other digital tokens.

You should calculate each transaction in pounds sterling, using the market rate on the date of the transaction.

HMRC requires this information to be included in your Self Assessment tax return, or through its digital disclosure service if you are correcting previous omissions.

Failure to declare overseas crypto gains can lead to penalties and interest on unpaid tax. HMRC may also treat unreported activity as deliberate tax avoidance if they discover it through data-sharing arrangements.

Record Keeping Is Essential

When using overseas platforms, you must maintain detailed records because not all foreign exchanges provide data in a format HMRC recognises. Keep:

• The date and time of each transaction.

• The type and quantity of crypto bought or sold.

• The value in pounds at the time of each trade.

• Exchange or transaction fees.

• Wallet addresses linked to the activity.

Accurate records will help you calculate your capital gains and prove compliance if HMRC ever questions your returns. Many investors use crypto tax software to consolidate data across multiple exchanges.

What If the Exchange Does Not Cooperate with HMRC

If your exchange operates in a jurisdiction with limited regulation, it might not share customer data automatically. However, this does not exempt you from UK tax obligations.

HMRC expects you to report your transactions voluntarily, even if it cannot yet obtain the data directly from the exchange.

In practice, HMRC can still trace crypto movements through blockchain analysis, especially if funds eventually move to or from a regulated exchange. It is far safer to report income and gains proactively than risk penalties later.

Converting Gains into Pounds

When using an overseas exchange, it is common for profits to remain in foreign currency or digital assets. For tax purposes, however, HMRC requires all calculations to be made in pounds sterling.

You must:

• Convert the value of each transaction using a reliable exchange rate on that date.

• Report your total gain or income in GBP.

• Keep evidence of conversion rates used, such as exchange rate screenshots or software records.

Even if you do not transfer funds back to a UK bank account, the gain is still taxable if you have disposed of the asset or earned income.

Dealing with Double Taxation

If you are both a UK tax resident and pay tax in another country where the exchange operates, you might be eligible for double taxation relief.

The UK has agreements with many countries to prevent the same income being taxed twice. A crypto accountant can review your situation, confirm which jurisdiction takes precedence, and ensure you claim any relief available under a double taxation treaty.

Why Professional Advice Is Important

Managing crypto tax across borders can be complex, particularly when trading through multiple exchanges in different countries. An accountant who understands cryptocurrency and international tax law can help by:

• Determining your tax residency and obligations.

• Converting overseas transactions into sterling values.

• Ensuring you claim all available allowances and deductions.

• Filing accurate returns and disclosures to HMRC.

• Advising on future tax-efficient trading structures.

Professional support ensures your overseas crypto trading remains compliant and that you do not pay more tax than necessary.

Example: UK Resident Using an Overseas Exchange

Suppose Sarah, a UK resident, trades on a crypto exchange based in Singapore. She buys Bitcoin for £20,000 and later sells it for £35,000. Even though the exchange is outside the UK, Sarah is still liable for Capital Gains Tax on her £15,000 profit.

If she also earns staking rewards worth £2,000 on the same platform, those rewards count as taxable income. Sarah must convert all figures into pounds, report them in her Self Assessment tax return, and keep evidence of the exchange rates used.

If HMRC later receives data from the exchange confirming her trades, her records will show she has complied fully with UK tax law.

Summary

Using an overseas crypto exchange does not exempt you from paying UK tax. If you are a UK resident, you must report all crypto profits and income to HMRC, regardless of where the trading platform is located.

Through global data-sharing agreements, HMRC can access information from international exchanges, making it increasingly difficult to hide undeclared gains. The safest approach is to maintain clear records, convert all values into pounds, and report transactions accurately.

With the help of an experienced crypto accountant, you can meet your obligations, claim any available reliefs, and ensure your international crypto trading remains fully compliant with UK tax law.