When you hear capital gains tax, you probably think of selling a house or stocks. Capital Gains Tax, the tax levied on profit earned from selling a capital asset. Also known as CGT, it applies to crypto assets the same way it does to traditional investments. That means every time you trade, sell, or even receive a token in a crypto airdrop, you create a taxable event that must be reported.
First, the crypto exchange, whether it’s a big player like Binance or a niche DeFi platform, records every trade. Those records become the raw data for calculating your gains or losses, which is why accurate tax reporting is essential. If you receive tokens from an airdrop, the fair market value at the moment of receipt is treated as ordinary income, then any later sale triggers capital gains tax on the price change. Likewise, swapping one token for another—say swapping ETH for a new meme coin—counts as a disposal of the first asset and acquisition of the second, creating a separate taxable event each time.
Second, the type of gain matters. Short‑term gains (held less than a year) are taxed at your ordinary income rate, while long‑term gains enjoy lower rates. This distinction influences how you schedule trades. For DeFi earners, staking rewards and liquidity‑pool payouts are also taxable, often as ordinary income when received, then as capital gains when you later sell the earned tokens. The DeFi earnings landscape changes fast, so staying current on the tax rules saves you from surprise liabilities.
Finally, record‑keeping is the glue that holds everything together. Export your trade history from each exchange, note the price at receipt for airdrops, and keep a log of every token swap. Many traders use spreadsheet templates or dedicated crypto‑tax software to automate the calculation of cost basis, holding periods, and gain/loss totals. By mastering these basics, you’ll turn a confusing tax maze into a manageable checklist, allowing you to focus on what you love—trading and exploring new projects.
Below you’ll find a curated list of articles that break down each of these topics in depth, from airdrop tax tips to exchange‑specific reporting guides. Dive in to see how the concepts we just covered play out in real‑world scenarios and get actionable steps you can apply right away.
A practical UK crypto tax guide for 2025 covering capital gains, income tax, rates, allowances, reporting steps and common pitfalls.