Crypto in the UK: regulation, protection and tax basics

The rules on crypto in the UK are still developing, and they change. This guide sets out the main points as general information. For your own situation, check the official pages linked at the end, and consider speaking to a qualified tax adviser.

Who regulates crypto in the UK

The Financial Conduct Authority (FCA) is the main regulator. At present, firms that carry out crypto business in the UK must register with the FCA under the anti-money-laundering rules. That registration is about preventing financial crime. It does not mean the FCA checks whether a firm is financially sound or that your money is safe with it.

Firms that promote crypto to UK consumers must also follow the FCA's financial promotion rules. These include clear risk warnings, and steps such as a cooling-off period and checks that a first-time customer understands the risks. The government has set out plans to bring more crypto activity under full FCA regulation, so expect the rules to change.

What protection you do and don't have

• The Financial Services Compensation Scheme (FSCS) generally does not cover cryptoassets if a firm fails.
• You generally cannot take a complaint about crypto to the Financial Ombudsman Service.
• If you are scammed, getting money back is often very difficult. Contact your bank quickly if you paid from a bank account or card.

Capital Gains Tax

HMRC does not treat crypto as currency. For most individuals, cryptoassets are treated as assets for Capital Gains Tax. You may need to pay tax on any gain when you "dispose" of them. A disposal includes:

• selling crypto for pounds or another currency
• swapping one cryptoasset for another
• using crypto to pay for goods or services
• giving it away, other than to a spouse or civil partner

Gains up to the annual exempt amount are tax-free, and you can usually set losses against gains. The exempt amount and tax rates change, so check the current figures on GOV.UK. HMRC has its own rules for working out the cost of tokens you bought at different times, known as pooling.

Income Tax

Some crypto counts as income rather than a gain. This can include crypto you receive from an employer, from mining, or from some staking and lending arrangements, depending on the details. Income Tax and, in some cases, National Insurance may apply.

Keeping records

HMRC expects you to keep records of each transaction: the date, the type of token, the number of units, the value in pounds at the time, and any fees. Exchanges may close or delete histories, so download your records regularly. If you need to report gains or income, you usually do so through Self Assessment.

Before you act

• Check any firm on the FCA register before using it.
• Read the GOV.UK guidance on selling and receiving cryptoassets.
• Keep full records from day one.
• Get professional tax advice if your situation is not straightforward.

Sources and further reading

• Cryptoassets – Financial Conduct Authority
• Cryptoassets: information for firms – Financial Conduct Authority
• Check if you need to pay tax when you sell cryptoassets – GOV.UK
• Check if you need to pay tax when you receive cryptoassets – GOV.UK
• HMRC Cryptoassets Manual – GOV.UK

More guides

• A beginner's guide to cryptocurrency: how it works, buying it and keeping it safe
• Self-custody explained: wallets, recovery phrases and smart contract risk
• Crypto scams: the warning signs and what to do if you're targeted
• DeFi explained: decentralised exchanges, liquidity pools and the risks