Jasmine Birtles
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Three Crypto Tax Mistakes That Could Cost You in 2025
Ruby Layram
8th Aug 2025
So, you made a few quid trading Bitcoin last year. Or maybe you’ve been quietly staking Ethereum or dabbling in some altcoins. But here’s the bit nobody talks about until it’s too late: HMRC wants its cut, and if you’re not careful, you could end up with a hefty fine (or worse) in 2025.
As crypto continues to boom, with Bitcoin alone growing over 120% in the past year, the taxman is taking serious notice. According to Lee Murphy, tax expert and managing director of The Accountancy Partnership, thousands of UK crypto investors are at risk of getting into trouble simply because they don’t know the rules.
Let’s break down three common crypto tax mistakes that could cost you dearly this year, and how to avoid them.
Also read: 5 crypto coins I’m watching in 2025
1. Forgetting that crypto swaps are taxable
One of the biggest misconceptions among casual investors is thinking you only owe tax when you “cash out” into pounds.
Wrong.
If you’ve traded Bitcoin for Ethereum, or sold one token to buy another, that’s a taxable event. HMRC sees this as a disposal of an asset, and that means Capital Gains Tax (CGT) could apply.
Even if you never saw a penny hit your bank account, you still might owe tax on the gain you made in that swap.
As Murphy puts it: “Swapping one crypto for another sometimes gets forgotten about and is a common mistake we see when people are doing their tax returns, which can sometimes get people into trouble.”
Track every trade, including swaps. If you bought Bitcoin at £10K and swapped it for another crypto when it was worth £15K, that’s a £5K gain, potentially taxable.
Also read: Are crypto gains taxable in the UK?
2. Not keeping proper records
Crypto can be chaotic. Between wallets, exchanges, NFTs and DeFi platforms, it’s all too easy to lose track. But HMRC expects you to keep a detailed record of every transaction, yes, every single one.
That includes:
- Dates of transactions
- Amounts in GBP at the time
- Fees paid
- Platforms or wallets used
“Every transaction needs to be tracked, including dates, the amount, conversions and the platforms used to sell,” Murphy warns.
Why does this matter? Because without proper records, you might under-report gains, or overpay tax unnecessarily. And if HMRC suspects anything dodgy, they can fine you up to £300 per incorrect return.
Use a spreadsheet or a crypto tax tracker tool (like this free calculator) to stay on top of your transactions.
3. Assuming HMRC can’t see your crypto
Here’s a wake-up call for anyone who still thinks crypto is “anonymous” or invisible to the taxman.
It’s not
HMRC has been working closely with crypto exchanges to get hold of user data, yes, that means they probably already know if you’ve made gains. And if you don’t declare them? That’s where fines, penalties, or even prosecution could come in.
“Assuming that it’s anonymous is a huge mistake,” says Murphy. “HMRC has been working with online exchanges to get user data, and if you’ve made gains and not declared any of them, then they will know about this.”
This also applies if you’ve been paid in crypto for work, or earned rewards from mining or staking. In those cases, you might owe income tax, not CGT. Either way, HMRC is watching.
Declare your crypto earnings properly. It’s not worth the risk, especially as tax rules are tightening.
So, how do you stay on the right side of HMRC?
Here’s your action plan:
✅ Track everything. Every trade, swap, stake and salary payment—log it clearly and consistently.
✅ Understand how you’re taxed.
- Selling/switching crypto = Capital Gains Tax
- Earning/staking/mining crypto = Income Tax
✅ Use your allowance wisely. The annual CGT allowance is now just £3,000 (and dropping), so it’s easier than ever to trigger a tax bill without realising.
✅ Don’t bury your head in the blockchain. Use tools like The Accountancy Partnership’s free calculator to work out what you owe and whether you need to file a tax return.
Final Word
Crypto might be decentralised, but tax rules definitely aren’t. And with HMRC ramping up its efforts in 2025, now’s the time to get your digital house in order.
If in doubt, speak to an accountant who understands crypto (yes, they do exist now). Because when it comes to tax, what you don’t know can cost you.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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