The UK tax treatment of crypto-assets, particularly for individuals not originally from the UK, remains a complex and evolving area. Central to the issue is the concept of “situs” — the location of assets for tax purposes — which determines whether gains or income from cryptocurrencies, etc are subject to UK tax.
Impact for Non-UK Persons
Individuals not originally from the UK could previously claim the remittance basis, such that non-UK income and gains were not taxed in the UK unless remitted to the UK.
Since April 2025, new arrivers to the UK can utilise the "FIG Regime" to escape UK tax on foreign income and gains altogether in their first four tax years as UK tax residents.
For these persons in particular, whether their cryptoassets are UK situs or foreign situs is key to their tax planning and exposure.
Situs rules and cryptoassets
The Capital Gains Tax (CGT) legislation provides situs rules for certain named assets, including shares, intellectual property and bank accounts. It does not explicitly cover cryptocurrencies, which are a (relatively) novel and unique form of property that do not neatly fit those categories.
HMRC’s current published guidance broadly provides that the location of cryptoassets is determined by the tax residence of the beneficial owner.
However, this view is not legally binding and has been criticised by professionals and industry bodies on several grounds, including the following:
- No legal basis: Legislation is silent, and caselaw is lacking. Whilst the case Tulip Trading v van der Laan [2022], referenced the issue, it was not a tax case, and was overturned on other grounds.
- Inconsistency: Residence is not the sole determining factor of situs for any other asset class.
- Contrary principles: HMRC’s stance makes cryptoassets taxable simply by becoming UK resident, which conflicts with the principles of the remittance basis and the new FIG regime.
Commentators have suggested alternative tax situs rules based on other factors, including where the holding accounts / wallets are managed, the governing law of exchanges or the location of the key.
Tax filings for crypto income and gains
Given the unsettled legal position, HMRC’s guidance is not definitive. Taxpayers with crypto income or gains who wish to take a different view from HMRC may consider disclosing this in their tax return, alongside taking other planning steps.