Last updated: 14 October 2026
How is it taxed if you’re paid in crypto?
Being paid in cryptocurrency is taxed in the same way as being paid in pounds. Employees paid in crypto pay income tax and NIC on its sterling value when they receive it, and if the tokens are readily convertible, the employer must operate PAYE. Self-employed people include the sterling value of crypto received as business income. Later, when you sell, swap or spend the crypto, any increase in value since you received it is a capital gain, taxable after the £3,000 annual exempt amount at 18% or 24%.
Two taxes, two moments
| Moment | Tax | Value used |
| Receiving crypto as pay or fees | Income tax (and NIC) | Sterling value on the day received |
| Selling, swapping or spending it | CGT | Proceeds less the value on receipt |
Employees
If your employer pays you in tokens that can be traded on an exchange, they’re “readily convertible assets”. The employer must work out the sterling value, deduct PAYE and NIC, and pay employer NIC. If tokens aren’t readily convertible, you may need to report the income through Self Assessment.
Self-employed and freelancers
Include the sterling value of crypto received for goods or services in your turnover at the date of receipt. If you’re on the cash basis, it’s taxed when you receive it. Keep a record of the exchange rate source you used.
Example
Ben, a freelance developer, is paid 0.2 BTC for a project in June 2026, worth £12,000 that day. He includes £12,000 in his trading income. In March 2027, he sells the 0.2 BTC for £15,000. His capital gain is £3,000, which is covered by his annual exempt amount. If he’d sold for £9,000, he’d have a £3,000 capital loss to set against other gains.
Reporting from 2026
From 1 January 2026, UK crypto exchanges must report users’ transactions to HMRC under the Cryptoasset Reporting Framework. HMRC will match this with tax returns, so it’s important to report correctly. The Self Assessment return has a separate crypto section for capital gains.
Pooling rules
Crypto of the same type is pooled for CGT, using an average cost. Special rules apply for tokens bought and sold within 30 days.
Common mistakes
- Only reporting crypto when converted to pounds
- Not taxing crypto received as pay
- Ignoring swaps between tokens, which are disposals
- Not keeping exchange rate evidence
Records to keep
Keep wallet addresses, transaction histories, invoices and the sterling value of each receipt and disposal. Exchanges may close, so download records regularly.
Paying suppliers in crypto
If your business pays suppliers or staff in crypto, each payment is also a disposal of the tokens for CGT, or a trading transaction for a company. You need the sterling value of every payment, both as a cost in your accounts and to work out any gain on the tokens used.
Frequently asked questions
Is a crypto bonus from my employer taxable?
Yes, as earnings.
Are staking rewards taxable?
Usually as income when received.
Is gifting crypto to my spouse taxable?
No, it’s no gain, no loss.
What if I lose access to my wallet?
You may be able to claim a negligible value loss.
Related: reporting crypto profits, freelance income while employed and revenue from a new consulting business.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with crypto tax returns. See our sole trader accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
