Cryptoassets – which include cryptocurrency – are big business. In 2025, around 741 million people owned cryptocurrency globally, with Bitcoin and Ethereum remaining the poster children of the industry. This growth in popularity has led to more taxpayers dabbling in cryptoassets, whether in the hopes of making huge gains or just to see what the fuss is about.
However, cryptoassets are not exempt from tax, so it’s important to know the basics: namely, how they are taxed, and what (if anything) you need to report to the tax authorities.
Cryptoassets are not currency
First and foremost, it’s important to understand that cryptoassets – including cryptocurrency – are not considered ‘currency’ for tax purposes, and they are not ‘tax free’ assets. Instead, the way that cryptoassets are taxed depends on how you acquire the asset and what you intend to do with it.
For the majority of people, cryptoassets are held as investments and are taxed as capital assets, subject to the capital gains tax (CGT) rules.
When is there a cryptoasset disposal?
Where a cryptoasset is subject to the CGT rules, capital gains tax needs to be considered whenever there is a disposal of an asset.
If you have multiple ‘wallets’ and move tokens between them, this doesn’t typically trigger a disposal for CGT purposes. However, there are other instances where a disposal can arise. For example, when you:
- sell a crypto asset
- trade, exchange or swap one crypto asset for another
- convert a crypto asset to another currency
- buy goods or services with a crypto asset
- gift an asset (in certain circumstances).
Generally, the disposal is taken to have happened at the time of one of the above events. So if, for example, you sell some Bitcoin in December 2026, this will be an assessable disposal in the 2026-27 tax year.
As with other assets, when you dispose of a cryptoasset you’ll end up with either a capital gain or, if the cryptoasset has lost value, a capital loss, which can be used to reduce any other capital gains you make.
What records should I keep?
One of the more challenging aspects of investing in cryptoassets is keeping proper and accurate records. At a minimum, your records should cover:
- the type of cryptoasset you hold
- the date of the transaction
- the type of transaction (e.g. if the asset was bought/sold, and how)
- the value of the transaction in your local currency (as at the time of the transaction), and
- the cumulative total of investment units you hold.
Such records should be kept for each cryptoasset held.
It’s also important to keep local records from crypto exchanges, as some exchanges only store such data for a limited period of time. If you hold cryptoassets, it’s a good idea to export your transaction history regularly (for example, every three months or so) to make sure you don’t lose any valuable information.
Crypto can be complicated
Because they’re a relatively new asset class, cryptoassets can be difficult to navigate when it comes to tax. While the above is a general summary of the rules that apply to cryptoassets held as investments, other tax treatments can apply, especially if you are trading, using crypto in your business, or if you stake crypto or receive airdrops. For a more specific discussion, speak to a member of our team today.