With cryptocurrency trading on the rise, many UK investors and businesses are unaware that crypto-to-crypto transactions can still trigger tax liabilities – even if no fiat currency is involved. HMRC has clear rules on how these are treated for tax purposes in 2025.
1. What Is a Crypto-to-Crypto Transaction?
A crypto-to-crypto transaction is where you exchange one cryptocurrency for another without converting to GBP or another fiat currency. Examples include:
- Swapping Bitcoin (BTC) for Ethereum (ETH)
- Exchanging Litecoin (LTC) for stablecoins like USDT
- Using crypto to purchase NFTs or DeFi tokens
2. HMRC’s Tax View
HMRC considers most crypto assets to be chargeable assets for Capital Gains Tax (CGT) purposes.
A crypto-to-crypto swap is treated as two transactions:
- Disposal of the original asset (e.g. BTC)
- Acquisition of the new asset (e.g. ETH)
If the value of the asset you dispose of is higher than your original purchase cost (adjusted for any allowable costs), you may owe CGT.
3. Calculating the Gain or Loss
You must:
- Work out the GBP value of the crypto at the time of the transaction (using a reliable exchange rate)
- Deduct the allowable cost (purchase price + transaction fees)
- Record the resulting gain or loss
Example:
- Bought 1 BTC for £20,000
- Later swapped 1 BTC for 15 ETH worth £25,000
- Gain = £25,000 – £20,000 = £5,000 (taxable if over CGT allowance)
4. Tax-Free Allowances
- CGT Annual Exempt Amount 2025/26: £3,000 for individuals (£1,500 for trusts)
- Gains above this are taxed at 10% (basic rate) or 20% (higher/additional rate)
5. Record Keeping Requirements
HMRC requires detailed transaction records, including:
- Dates of acquisition and disposal
- GBP value at transaction time
- Amount and type of crypto
- Transaction fees
- Wallet and exchange details
Failure to keep records can result in penalties.
6. Common Misconceptions
- “No tax if I don’t cash out to GBP” – Incorrect, swaps are still disposals
- “HMRC can’t track crypto” – Exchanges often share user data with HMRC
- “Small trades don’t matter” – Every trade counts toward your CGT total
How Eclat Accountancy Can Help
We assist crypto investors and traders with:
- Accurate CGT calculations for crypto swaps
- Detailed record keeping tools
- HMRC-compliant tax reporting
- Strategies to minimise taxable gains
Final Thoughts
Crypto-to-crypto transactions are taxable events in the UK. Keeping accurate records and understanding HMRC’s approach is essential to avoid unexpected tax bills.
Contact Eclat Accountancy today for expert crypto tax advice tailored to your trading activity.
