No items found.
2023-05-19

Yield farming or DeFi interest

Earnings from yield farming or lending crypto in DeFi platforms are taxed as income at the time they are received. However, depositing into and withdrawing from a liquidity pool may be treated as a disposal, which is a capital gains event.

  • Example: Earning £500 in interest from a DeFi platform is subject to Income Tax.

Payments for goods or services

Receiving cryptocurrency as payment for goods or services is treated as income at its market value when received. There are instances where the “value” of the work will be taxed instead of the value of the crypto received. Professional advice should be taken if you are unsure.

  • Example: If you're paid 0.2 BTC for freelance work worth £6,000, this amount is subject to Income Tax.

Receiving airdrops

If you actively participate to receive an airdrop (e.g., completing tasks), the tokens are treated as income at their market value upon receipt.

  • Example: Earning £100 in tokens from an airdrop after completing tasks is subject to Income Tax.

Mining rewards

Mining rewards are taxed as income. Those undertaking mining activities to an extent to which they are operating a business will be subject to additional tax obligations.

  • Example: Earning 0.5 BTC through mining worth £10,000 at the time of receipt is subject to Income Tax.

Staking rewards

Cryptocurrency earned through staking is considered income at the market value at the time of receipt.

  • Example: If you earn 0.1 ETH through staking worth £200, this amount is subject to Income Tax.

Providing liquidity

Adding liquidity: If adding assets to a liquidity pool results in a change of ownership or creates a new token (e.g., LP tokens), it may be considered a taxable disposal, with CGT applying to any gains. The answer to this can usually be found within the terms and conditions of the protocol.

Removing liquidity: Removing assets from a liquidity pool may also be a disposal, potentially triggering CGT based on the gain or loss relative to the cost basis.

Liquidity pool rewards are generally treated as taxable income upon receipt, subject to Income Tax.

Selling airdropped tokens

Selling tokens received through an airdrop is a taxable disposal.

Tokens received without any action (eg, unsolicited distributions) are not taxed as income upon receipt. Instead, they are subject to Capital Gains Tax (CGT) when sold, with the cost basis typically being zero or the fair market value at the time of receipt if explicitly stated by HMRC.

Tokens earned through performing tasks (eg, completing activities) are taxed as income at the market value in GBP upon receipt. When sold, the gain or loss is subject to CGT, calculated using the market value at receipt as the cost basis.

  • Example: You perform a series of tasks to qualify for an airdrop. You then sell that airdropped token for £500 and it has a cost basis of £200. The £200 cost basis would have been subject to income tax in the tax year in which it was received and the £300 gain is subject to CGT in the tax year in which the token is sold.

Selling NFTs

Disposing of NFTs is treated similarly to crypto disposals, with gains subject to CGT.

  • Example: If you bought an NFT for £1,000 and sold it for £3,000, the £2,000 profit is taxable.

Gifting cryptocurrency (excluding spouse or civil partner)

Gifting crypto to someone triggers CGT based on the market value at the time of the gift. Gifting to registered charities or your spouse or civil partner does not trigger a taxable event. Here, we have often seen individuals gifting tokens to others but keeping them in their own wallet. If this is the case, it is very important to document the gift. Consider speaking to a tax advisor if you are uncertain of your position.

  • Example: Giving 1 ETH to a friend worth £2,000 incurs CGT on any gains above its cost basis.

Using crypto to purchase goods or services

Spending cryptocurrency on goods or services is considered a disposal.

  • Example: Paying 0.5 BTC for a laptop is a taxable event. If the BTC had a cost basis of £5,000 but was worth £10,000 at the time of the transaction, the £5,000 gain is subject to CGT.

Crypto-to-crypto trades (swaps)

Exchanging one cryptocurrency for another (e.g., BTC for ETH) is treated as a disposal for tax purposes.

  • Example: Swapping BTC worth £5,000 for ETH creates a taxable event, with any profit based on the cost basis of your Bitcoin. The value of the BTC when swapping will be the proceeds and will also become the cost of the ETH that has been obtained.

Selling crypto for GBP

Any profit made when you sell crypto for fiat currency (e.g., GBP) is a taxable event.

  • Example: If you bought BTC for £10,000 and sold it for £15,000, you have a taxable gain of £5,000.

How Investing vs Trading impacts tax

In most cases of buying and selling cryptocurrency as a retail investor, you are participating in investing rather than trading. The two are treated differently for tax purposes.

  • Investing is subject to capital gains tax or income tax, depending on the nature of the transaction.
  • Trading in this case refers to self-employment which is subject to income tax and National Insurance Contributions.

The key difference between investing and trading – along with the different tax treatments, is how losses generated in the crypto-activity can be used.

In their guidance, HMRC have explicitly stated that they would expect it to be exceedingly rare that any crypto-activity constituting buying & selling crypto would be classified as “trading”.

If you are uncertain, speak to a tax advisor as there are always exceptions, including but not limited to, developing tokens and large scale mining.

How is crypto tax calculated in the United States?

You can be liable for both capital gains and income tax depending on the type of cryptocurrency transaction, and your individual circumstances. For example, you might need to pay capital gains on profits from buying and selling cryptocurrency, or pay income tax on interest earned when holding crypto.

All Countries

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
UK flags
United Kingdom
Guides
19
 
May
 
2023
 - 
10
min read

How to use this calculator

Crypto Tax Calculator is one of the simplest tax calculators on the market but the tax process is complicated no matter where you live. This guide breaks down the step by step process for getting your crypto taxes calculated as quickly as possible.

Key takeaways
This tax guide is regularly updated: Last Update  
CryptoTax Calculator thumbnail

Introduction

We’ve tried to make Crypto Tax Calculator as easy to use as possible, that said with crypto being such a complex ecosystem we wanted to take the time to explain the best way to use CTC to ensure your results are accurate and quick.

If you have any questions or are struggling with the process please feel free to reach out to support.

Importing Data

The first and most important step in the process is importing your crypto data. Under the 'Integrations' tab, you can select the exchange you have used or crypto wallet you have. The exchanges will either have a CSV import option or an API we can use. There should be instructions on how to do both of these for the major exchanges.

If you are using a CSV import login to your exchange account and download a transaction or trade history - then upload this to CTC.

For an API import generate a read-only API key and provide the details to CTC, we have strict security measures in place but we always recommend generating read-only API keys when sharing your data with third parties. This ensures they can’t make any trades on your behalf.

For crypto wallets we just need the public address of the wallet, from this we can get the transaction history from the blockchain.

At this stage you can also assign a nickname to your wallets, this might seem unnecessary at this stage but it makes reviewing transactions in the next step much easier. It is much easier to remember transactions that have a wallet name to and from instead of a random string of numbers and letters.

The most important thing to remember at this stage is to upload ALL your wallets and exchange accounts. All your accounts/ wallets across all the years you have traded. This enables the most accurate version of your tax obligation and it is a requirement of all governments to keep complete records.

Reviewing Transactions

For exchange accounts we can often get the transaction type from the import file or API however for other crypto wallets because there are so many different transaction types the process is harder. For some platforms such as Uniswap or DeFi protocols we can generally ascertain if you were making a trade, receiving an interest payment, transferring between protocols but you will notice some transactions are categorized as in/out which means you have to label them yourself. It is also a good idea to double check that the transactions are correctly labelled.

At this stage, you can also manually add transactions. If CTC doesn’t support the exchange you are using or the transaction history you have doesn’t go back far enough you should manually add the transaction based on the date, coin, and price.

CTC has error checking built in to help identify if you are missing data. For example, if a transaction leads to a negative balance you could be missing a transaction or wallet.

What do all the transactions do to the calculator?

Buy: calculates the cost basis for future token sales. This does not trigger a CGT event in the app. Sell: capital gains payable when a sale occurs, tax based on the price at sale and price when bought

Transfer: Transaction between accounts where you have control of the funds e.g. moving crypto from Binance to your wallet. This has no impact on capital gains from within the CTC app.

Airdrop: Proceeds from airdrops are income based on the price when the airdrop occurs. Any future sale of the crypto is a capital gain event with a cost basis the same as the income price. For example, you are airdropped 5 YFI when its value is $100, you sell a week later when the price is $10,000. Your income is $100 and capital gains $9900.

Staking: proceeds from staking are not capital gains but income similar to airdrops. Chain split: capital gains are not payable when a chain split occurs but new tokens will have a cost basis of 0 for future trades

Personal Use: this is crypto you have for the purpose of purchasing goods or services and is thus not subject to capital gains tax

Lost/ Stolen: CTC will treat this as a capital loss, where the loss is calculated as the $0 - the price you bought the crypto at.

Long/Short:Used for contract for difference trades Margin fee: A margin fee associated with a long/short margin trade.

What if something is wrong

If you notice anything is incredibly wrong with your tax reports page it is likely one of two reasons:

  1. You haven’t uploaded all your transaction data - double-check you have all your wallets/ exchanges across all the years you’ve traded

  2. Some of your transactions are incorrectly labelled which impacts the tax calculation If you are sure you have followed all the steps correctly and you are still having problems please reach out to support and we can help.

The Report Page

On the report page there two key pieces of information you need to file your taxes. The summary numbers at the top of the page show your capital gains for the year and income gained. The second is the downloadable tax report that you can either use to fill out your taxes yourself or pass along to an accountant.

There is also an option to change the reporting period and inventory method used for the calculation. You will need to change the reporting period if you want to amend your taxes for previous years and the inventory method if you don’t want to use the standard one used in your country, most likely First in First Out.

Finally you will see summary graphs about the profit breakdown for individual currencies and your portfolio at the end of the period. This can be used to keep track of how your portfolio is trading but can also be used as a sanity check to make sure the calculator has recorded all it needs.

The Dashboard

Everything above helps you calculate your taxes, this is the primary reason to use CTC. The dashboard helps you monitor the performance of your portfolio year around, figure out which coins have been profitable for you, what happens if you liquidate your portfolio now. If you have multiple accounts or your investing in multiple currencies it can help to see the broad picture of how your portfolio is going at any one time.

The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Crypto Tax Calculator disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.

FAQ

No items found.
Table of contents

More resources

CryptoTax Calculator thumbnail
Guides
14
 
Jul
 
2025
How to do your Importing Your Robinhood Data taxes in 2025
Read More
July 14, 2025
CryptoTax Calculator thumbnail
Guides
12
 
Apr
 
2025
Can The IRS Track Bitcoin? Yes, here’s how

Learn how Bitcoin is taxed in the U.S., the difference between short and long-term capital gains, and how timing your sale can cut your crypto tax bill.

Read More
April 12, 2025
CryptoTax Calculator thumbnail
Guides
11
 
Apr
 
2025
Bitcoin Taxes in the USA: The Complete 2025 Guide

Bitcoin is taxed as either capital gains or income tax depending on the transaction. Learn how to do your Bitcoin taxes with this guide.

Read More
April 11, 2025

Try Crypto Tax Calculator today

Import your transactions and generate a free report preview.

;