Most people think of Capital Gains Tax (CGT) as something that only applies to property or shares. In practice, HMRC treats cryptoassets like Bitcoin and Ethereum, and many personal possessions above a certain value, as assets that can trigger a CGT bill when you dispose of them at a profit. Understanding the rules — and keeping decent records — matters more than most people realise, because the tax point is often missed entirely until a compliance letter arrives.
What counts as a disposal
A "disposal" for CGT purposes isn't just selling something for cash. It also includes:
- Swapping one cryptoasset for another (for example, trading Bitcoin for Ethereum)
- Using crypto to pay for goods or services
- Gifting an asset to someone other than your spouse or civil partner
- Selling a valuable personal possession such as jewellery, art, or antiques for more than you paid
Each of these events is treated as if you sold the asset at its market value on that date, even if no cash changed hands.
How gains are calculated
The gain is broadly the disposal value minus what you originally paid (the "base cost"), minus any allowable costs such as transaction or exchange fees. For cryptoassets, HMRC requires you to "pool" tokens of the same type, similar to the share-matching rules used for stocks, rather than tracking each individual coin separately. If you buy the same token on different dates at different prices, you generally use a pooled average cost, with specific same-day and 30-day matching rules to prevent "bed and breakfasting" — selling and immediately rebuying to crystallise a loss or gain artificially.
Personal possessions and the "chattels" rules
Physical items you own for personal use — often called chattels — have their own treatment. Personal possessions individually worth less than a set threshold (traditionally £6,000) when sold are generally exempt from CGT. Above that threshold, gains on chattels such as paintings, antiques, or collectible items can be taxable, though special calculations can limit the tax where the sale proceeds are only just over the threshold. Cars are a notable exception: private cars are exempt from CGT regardless of value or gain.
A worked example
| Step | Detail |
|---|---|
| Bought | 1 BTC for £20,000 |
| Sold | 1 BTC for £35,000 |
| Gain | £15,000 |
| Less annual exempt amount | Reduces taxable gain (see our CGT allowance guide for the current figure) |
| Tax due | Charged at the basic or higher CGT rate depending on your other income |
Record-keeping and reporting
You're legally required to keep records of every acquisition and disposal: dates, amounts, the asset's value in pounds sterling at the time, and any fees. For crypto this is often harder than it sounds, because exchanges close, wallets move, and transaction histories can be incomplete years later. Many people use crypto tax software that plugs into exchange APIs to reconstruct a full transaction history.
If your total gains for the year exceed the annual exempt amount, you must report them to HMRC — either through Self Assessment or via HMRC's real-time CGT reporting service — and pay any tax due within the relevant deadline.
Common mistakes
- Assuming that only converting crypto back to pounds is a taxable event — swapping between coins counts too
- Forgetting that using crypto to buy something is a disposal at market value
- Not tracking pooled cost basis correctly when buying the same coin repeatedly
- Overlooking losses — these can be reported to HMRC and carried forward to offset future gains, even if you're below the exempt amount this year
What to do next
If you've bought, sold, swapped or spent cryptoassets, or sold valuable personal possessions, start by pulling together a full transaction history now rather than waiting until a tax return is due. Where the numbers are large or the history is messy, a specialist accountant familiar with crypto CGT can save considerably more than they cost.