Is crypto legal in the UK?

It’s legal to own, buy, sell, and trade cryptocurrency in the UK. Businesses that deal with crypto must follow regulations from the Financial Conduct Authority (FCA). However, it is not legal tender, so it cannot be used as official currency for payments like the pound sterling. It means that cryptocurrency is not an obligatory payment option. Besides, it cannot be used for official transactions like taxes or fines in the UK.

Crypto taxes in the UK

Crypto transactions are subject to taxation under UK law. HM Revenue & Customs (HMRC) treats crypto as property, not money.

Here’s what it means:

• Capital Gains Tax (CGT) is applied to profits when selling, trading, or disposing of crypto. The annual exempt amount is £3,000 for the 2024/2025 tax year. Gains above this threshold are taxed at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
• Income tax is applied if crypto is received through mining, staking, airdrops, or as salary. Tax rates follow standard income tax bands: 0% up to £12,570, 20% between £12,571-£50,270, 40% between £50,271-£125,140, and 45% above £125,140.
• Inheritance tax is considered part of your estate and may be taxed if the estate exceeds £325,000.

Reporting and compliance:

• Registration for Self Assessment is required if not already completed.
• Gains must be reported via Self Assessment by 31 December in the tax year following the year the gain was made.
• Any tax due must be paid by 31 January after the end of that tax year.

Example: Gains made in the 2024/25 tax year must be reported by 31 December 2025, with payment due by 31 January 2026.

For detailed guidance, refer to HMRC’s cryptoassets manual

Crypto regulations and compliance rules

The UK does not yet have a single dedicated crypto law. Instead, the sector is regulated under existing financial frameworks:
• Financial Conduct Authority (FCA). Since January 2020, all crypto businesses offering services in the UK must register with the FCA to meet anti-money laundering (AML) and counter-terrorist financing (CTF) requirements.
• Marketing rules. From October 2023, new FCA rules apply to crypto promotions. These include clear risk warnings and a 24-hour cooling-off period for first-time investors.
• Stablecoins. The government has proposed legislation to bring certain stablecoins, particularly fiat-backed ones, into the financial system. The goal is stronger consumer protection, but these rules are not yet in force.

Key compliance requirements for crypto businesses:

• FCA registration and reporting
• Strict Know-Your-Customer (KYC) checks
• AML/CTF monitoring and suspicious activity reporting

Crypto is legal in the UK, but it operates under strict rules. Individuals can trade and hold assets. Businesses must meet FCA requirements.

Taxes apply to profits, income, and inheritance. See the table below for more details:

Transparent practices are encouraged under FCA marketing rules to ensure fair communication with consumers. The regulatory environment encourages responsible use and clear communication.

Cryptocurrency investments involve risk. The value of crypto assets can go up or down, and you may lose all the capital you invest. Past performance is not indicative of future results.