Swapping one cryptocurrency for another might feel like a smart move to rebalance your portfolio or chase the next big token. It happens in seconds on your favourite exchange, and there’s no fiat involved, so it barely feels like a transaction. But the HMRC doesn’t see it that way.
In the UK, even a simple crypto-to-crypto trade is considered a taxable event. If you’re not careful, these everyday swaps can quietly stack up tax liabilities that come knocking during the filing season.
Crypto-to-crypto swaps refer to the direct exchange of one digital asset for another without involving traditional fiat currencies.
The process usually feels like a simple conversion, but behind the scenes, it’s treated as a disposal of one asset and the acquisition of another.
This makes understanding the tax consequences all the more crucial for UK investors seeking to comply with HMRC rules.
Read More: Crypto Tax UK- Ultimate Tax Guide 2025
Are Crypto Swaps Taxable in the UK?
According to HMRC, cryptoassets are treated as property, not as foreign currency. This classification significantly changes how transactions are taxed. Unlike currency exchange, swapping crypto isn’t tax-neutral.
Crypto swaps may seem like simple trades to the average investor, but under HMRC guidelines, they are treated quite differently for tax purposes. Each swap is legally a disposal and triggers a potential Capital Gains Tax (CGT) event. Below are the key reasons behind HMRC’s approach and what every UK crypto investor must understand.
Swapping Crypto = Disposing of an Asset
HMRC treats every crypto-to-crypto swap as the disposal of one asset and the acquisition of another. Even if no fiat currency is involved, exchanging BTC for ETH, for example, means you’ve disposed of BTC at its market value. This disposal must be reported, and any gains or losses realised must be included in your tax return.
Each Swap Is a Chargeable Event
Since swaps are disposals, they are chargeable events under the UK tax regime. That means each time you make a crypto-to-crypto transaction, it could result in a capital gain or loss. This rule applies even if you never convert your crypto back into GBP. HMRC views the gain as realised at the moment the swap occurs.
How Capital Gains Are Calculated for Crypto Swaps?
Understanding how capital gains are calculated on crypto swaps is essential to stay compliant with HMRC regulations. Each swap is treated as a disposal, and any resulting gain or loss must be accurately reported. Here’s a clear step-by-step breakdown of how these calculations work under the UK Capital Gains Tax framework.
Step 1: Identify the Acquisition Cost
The first step is to determine the original cost of acquiring the crypto asset you’re disposing of. This includes the purchase price and any associated transaction fees in GBP. You’ll need precise records to ensure that your base cost is calculated correctly.
Step 2: Determine the GBP Value at Disposal
Next, you must calculate the market value in GBP of the asset at the time of the swap. This represents the disposal value. Even if no fiat was exchanged, HMRC requires you to use the fair market value at the moment of the transaction.
Step 3: Subtract Allowable Costs
From the disposal value, subtract the original acquisition cost and any allowable expenses, such as exchange fees or network transaction costs. This gives you your capital gain or loss for that swap.
Capital Gains/Loss = Value at Disposal – (Cost of Acquisition + Allowable Costs) |
Step 4: Apply the CGT Rates If Gains Exceed the Allowance
If your total capital gains for the year exceed the annual CGT allowance (£3,000 for 2024–25), you must pay CGT on the gains above that threshold. The rate is 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers.
Example
Here’s a simplified example to demonstrate how CGT is calculated for a crypto swap:
- You bought Ethereum (ETH) for £600
- You later swapped ETH for Bitcoin (BTC) when ETH was worth £1,000
- Your capital gain is: £1,000 – £600 = £400
This £400 must be reported as a capital gain. If your total gains exceed the annual exemption, CGT will apply.
What Records Should You Keep for Crypto Swaps?
HMRC expects all crypto investors to maintain clear and accurate records of each transaction, including crypto-to-crypto swaps. Since every swap is treated as a disposal for Capital Gains Tax purposes, failing to document key details can result in errors, misreporting, or penalties during audits or investigations.
Date of Each Swap
You must note the exact date the swap took place. This helps HMRC determine the tax year in which the disposal occurred and whether it falls under any specific share pooling rules.
Type and Quantity of Crypto Involved
Record the type of cryptocurrency you disposed of and the quantity swapped. This ensures you are tracking asset movements accurately across your portfolio.
GBP Value at Disposal
Log the market value in GBP of the crypto you disposed of at the time of the swap. This amount will be used as the disposal value when calculating gains or losses.
GBP Value at Acquisition
Keep a record of the GBP value when you first acquired the crypto, including any fees paid at the time. This forms your cost basis for CGT purposes.
Fees or Charges Incurred
Include any transaction or exchange fees paid during the swap. These may be deducted from the gain to reduce your taxable amount.
Maintaining proper records for each crypto swap not only ensures HMRC compliance but also makes calculating your capital gains much easier and more accurate at the end of the tax year.
Do Same-Day and 30-Day Rules Apply to Swaps?
Under HMRC’s share pooling rules, crypto-to-crypto swaps are treated as disposals, which means the same-day and 30-day rules can apply. These rules help determine which acquisition cost is used when calculating capital gains on a disposal.
Same-Day Rule
If you buy and swap the same type of cryptocurrency on the same day, the same-day rule applies. The acquisition cost of the crypto purchased that day is matched with the crypto disposed of via the swap. This takes priority over other cost basis rules and prevents wash trading for tax advantage.
30-Day Rule
If you swap (dispose of) a crypto asset and then repurchase the same asset within the next 30 days, the 30-day rule is triggered. The cost of the crypto bought within this 30-day window is matched against the earlier disposal. This rule is designed to prevent short-term loss harvesting and ensures more accurate gain calculation.
Section 104 Pooling
If neither the same-day nor the 30-day rules apply, HMRC’s Section 104 pooling comes into effect. This method averages the acquisition cost of all tokens of the same type you hold and uses that average to calculate capital gains when you swap.
These matching rules are critical for calculating the correct tax on crypto swaps and must be followed for each individual transaction.
Are There Any Exceptions or Edge Cases?
While most crypto-to-crypto swaps are taxable under UK Capital Gains Tax rules, there are a few exceptions and grey areas to consider. Understanding these can help you better prepare your records and avoid unintentional non-compliance.
Gifting Crypto to a Spouse: Exception
If you give crypto to your spouse or civil partner, HMRC does not consider this a taxable disposal. Such transfers are treated as occurring at no gain and no loss. However, if the crypto is later disposed of by your spouse, the usual CGT rules apply to them. This is one of the few cases where crypto swaps are not taxable immediately.
Wrapping and Unwrapping Tokens: Edge Case
Wrapping a token (e.g., converting ETH to wETH) may seem like a technical operation, but HMRC usually treats it as a disposal followed by an acquisition. Although there’s no change in economic value, the legal form of the asset changes, triggering a taxable event. Unwrapping the token is treated the same way.
Cross-Chain Swaps: Edge Case
Swapping tokens between blockchains, such as moving assets from Ethereum to Solana, is another grey area. Despite being a technical migration, HMRC generally considers this as a disposal of one asset and acquisition of another. This makes the transaction liable for CGT, even if you retain the same token in a different format.
These edge cases highlight the importance of reviewing each transaction carefully. When in doubt, it’s best to treat the event as taxable and maintain full documentation.
How KoinX Simplifies Crypto Swap Taxation In The UK?
Manually tracking every crypto swap and calculating capital gains for each transaction is time-consuming and error-prone. With different platforms, volatile pricing, and complex HMRC rules, even seasoned investors can struggle to stay compliant. This is where KoinX makes things easier.
Integrates with Major Platforms
KoinX connects with 800+ exchanges, wallets, and blockchains, allowing you to bring all your crypto swap transactions into one place. Whether you’re trading on Binance, Kraken, or using a self-custody wallet, it ensures nothing is left out of your tax calculation.
Auto-Syncs Swaps Across Wallets & Exchanges
Instead of manually entering each swap, KoinX automatically pulls data across your connected accounts. This includes swap dates, market values, token quantities, and fees. It helps eliminate errors caused by missing or inconsistent data entries.
Applies Share Pooling and HMRC Rules
KoinX is built to follow HMRC-compliant tax rules. It automatically applies the same-day rule, 30-day rule, and Section 104 share pooling to every crypto swap. This ensures your gains and losses are calculated correctly, based on the latest tax laws.
Generates Accurate Capital Gains Reports
Once your data is synced and classified, KoinX generates ready-to-file reports. These include your capital gains summaries and detailed breakdowns of each swap, formatted to support your self-assessment tax return. It saves hours of manual effort and provides peace of mind during tax season.
Start simplifying your crypto tax calculations today. Try KoinX now and stay ahead of your 2025 filing deadline.
Conclusion
Understanding how crypto-to-crypto swaps are taxed in the UK is crucial for avoiding penalties and staying HMRC-compliant. Every swap you make is a taxable event, and proper record-keeping, tax calculations, and awareness of same-day or 30-day rules are all part of the process.
Don’t let crypto taxes slow you down. With KoinX, you can automate your crypto swap tracking, apply HMRC-compliant rules, and generate accurate tax reports in minutes. Join KoinX today and take control of your crypto taxes before the 2025 deadline.
Frequently Asked Questions
Do I Need to Report Every Swap I Make?
Yes, every crypto-to-crypto swap must be reported if it results in a gain or loss. Even small or frequent swaps are considered taxable events. Accurate records of each transaction, including date, value in GBP, and fees, are essential for correct reporting and compliance with HMRC guidelines.
What if I Swap Crypto But Don’t Withdraw It?
Even if no fiat currency is involved, swapping crypto is still a disposal in the eyes of HMRC. The tax is calculated based on the market value in GBP at the time of the swap. You are required to report it in your tax return, even if the new crypto stays in your wallet.
Are Gas Fees or Exchange Fees Deductible for Swaps?
Yes, HMRC allows reasonable transaction fees, including gas or exchange fees, to be deducted when calculating capital gains. Make sure these costs are properly recorded and attributed to the specific swap. Keeping accurate documentation of all associated charges is key to claiming deductions correctly.
What Happens If I Don’t Report My Crypto Swaps?
Failing to report swaps may lead to penalties, interest charges, or even a formal investigation. HMRC now uses international data-sharing tools to detect crypto disposals. If you miss reporting a taxable event like a swap, it’s advisable to make a voluntary disclosure to correct your tax position.
