Cryptoassets

HMRC treats cryptoassets as property rather than currency. For most individuals this means capital gains tax on disposals, although income tax can apply to mining, staking and airdrop rewards, and to tokens received through employment.

The most commonly missed point is that a disposal does not require converting anything to sterling. Exchanging one token for another, spending crypto on goods or services, and gifting to anyone other than a spouse or civil partner are all disposals for UK tax purposes. Many taxpayers who have never made a fiat withdrawal are nonetheless sitting on substantial unreported gains.

Calculating those gains is rarely straightforward. Share pooling applies, alongside the same-day and 30-day matching rules, and a typical portfolio spans several exchanges and wallets with thousands of transactions. DeFi lending and staking arrangements need particular care, as depending on their terms they can themselves amount to a disposal of the tokens deposited.

HMRC's visibility is increasing sharply

Under the Cryptoasset Reporting Framework (CARF), UK cryptoasset service providers have been required to collect user and transaction data since 1 January 2026. The first reports are due to HMRC by 31 May 2027, covering the 2026 calendar year, with information then exchanged internationally between participating jurisdictions.

In practice this means historic non-compliance is far more likely to surface than it once was. Where past disposals have gone unreported, a voluntary disclosure made before HMRC makes contact remains materially better than the alternative.

Prediction markets

Prediction markets illustrate how quickly the position can become complicated, and the 2026 World Cup, held between 11 June and 19 July, generated a considerable volume of activity among UK residents.

On a platform such as Polymarket, a single wager is given effect through more than one token: funds are held as a stablecoin, typically USDC, which is exchanged for outcome tokens specific to the individual market, with those tokens later sold or redeemed for stablecoin when the market resolves.

Each of those conversions is potentially a separate disposal of a cryptoasset. A position the client thinks of as one bet can therefore generate several chargeable events, and an active account can produce thousands of them across a tax year. The stablecoin leg matters too: USDC tracks the US dollar rather than sterling, so a gain or loss can arise on the stablecoin itself purely from exchange rate movement, even where its dollar value never changes.

There is a further and genuinely unsettled question of characterisation. In February 2026 the Gambling Commission indicated that prediction-market products fall within the definition of a betting intermediary under the Gambling Act 2005. Gambling winnings are not normally subject to UK tax, but it does not automatically follow that the underlying cryptoasset conversions fall outside the capital gains net. That interaction has not been settled, and anyone holding material positions should take advice rather than assume either treatment.

The timing is worth noting. World Cup activity falls into the 2026/27 UK tax year and sits within that first CARF reporting period. The resulting data reaches HMRC by 31 May 2027, whereas the 2026/27 self assessment return is not due until 31 January 2028, so HMRC may hold the transaction data some months before the taxpayer files.

The international dimension

For internationally mobile clients there is a further layer. HMRC's view is that exchange tokens are located where the beneficial owner is resident, which affects how gains are treated on arrival in or departure from the UK, and how they interact with the four-year Foreign Income and Gains regime.

How we can assist

We advise on the UK tax treatment of cryptoasset holdings and transactions, reconstruct transaction histories across exchanges and wallets, prepare defensible capital gains computations and tax return disclosures, handle voluntary disclosures of historic non-compliance, and manage HMRC enquiries where cryptoassets are in point.