Crypto Losses and Tax in the UK: Can You Claim Them?

Crypto markets move in both directions, and many investors are sitting on crypto losses as well as gains. The good news is that in the UK, capital losses on crypto can reduce your tax bill. The catch is that HMRC will not apply them automatically: losses generally need to be reported, and there are time limits. In this guide we explain when crypto losses are allowable for tax, how they are used against gains, what happens with worthless tokens, lost keys and scams, and the common mistakes we see.

When do crypto losses arise for tax?

For most individuals, crypto is subject to Capital Gains Tax (CGT). A capital loss arises in the same way as a gain: when you dispose of tokens. Disposals include selling for pounds, swapping one token for another, spending crypto and giving it away (other than to a spouse or civil partner). If the sterling value you receive is less than the allowable cost of the tokens disposed of, you have a loss.

The cost is calculated under HMRC's pooling rules, using the same-day rule, the 30-day rule and the Section 104 pool. This means your loss is based on the average pooled cost of that token, not on what you paid for a particular purchase. We explain the matching rules in crypto Capital Gains Tax in the UK.

A fall in value is not a loss on its own

If your portfolio is down but you still hold the tokens, you have not made a loss for tax purposes. A loss is only realised on a disposal, or through a negligible value claim (see below). Bear in mind that if you sell and buy back the same token within 30 days, the 30-day rule matches the repurchase to the sale, which can change the loss you expected to crystallise.

Can you claim crypto losses on taxes in the UK?

Yes. GOV.UK says you claim a loss by including it on your tax return, and that you can claim up to 4 years after the end of the tax year in which you disposed of the asset. For example, a loss made in 2022/23 (which ended on 5 April 2023) would need to be claimed by 5 April 2027.

From 2024/25 onwards the Self Assessment return includes a dedicated cryptoasset section. If you are not otherwise in Self Assessment, losses can still be reported to HMRC; the right route depends on your circumstances, so it is worth checking before the deadline passes.

Losses that are never reported generally cannot be used. If you have made crypto losses in recent years and not claimed them, it is worth checking which years are still within the 4-year window.

How crypto losses reduce your tax

Same-year losses

According to GOV.UK, when you report a loss, it is deducted from gains you made in the same tax year. Same-year losses are set against same-year gains before the annual exempt amount is applied, which means they can use up gains that the £3,000 allowance would otherwise have covered.

Carried-forward losses

Brought-forward losses work more generously. GOV.UK explains that if your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous years, and if they reduce your gain to the tax-free allowance, you carry forward the remaining losses to a future tax year. In other words, carried-forward losses are only used to bring your gains down to the £3,000 annual exempt amount, preserving the rest for later.

Illustrative example

This example is entirely fictional and simplified.

In 2024/25, Jordan sold some tokens at a loss of £9,000 and claimed it on that year's return. Jordan had no gains that year, so the full £9,000 was carried forward.

In 2026/27, Jordan makes gains of £14,000 on one token and a loss of £4,000 on another.

• Same-year loss: £14,000 − £4,000 = £10,000 net gain.
• Brought-forward loss: only enough is used to reduce the gain to the £3,000 annual exempt amount, so £7,000 is used.
• Taxable gain: £3,000 − £3,000 allowance = £0.
• Losses still available: £9,000 − £7,000 = £2,000 carried forward to 2027/28.

Had Jordan not claimed the 2024/25 loss within 4 years, it could not have been used.

Crypto losses and income

Capital losses are generally set against capital gains, not against income. If you receive staking rewards, mining income or other receipts that are taxed as income, a capital loss on selling tokens will not usually reduce the tax on that income. Different rules can apply to traders and companies, so this is one area where individual advice is worth having. Our guide to crypto staking and DeFi income explains which receipts are usually income.

Worthless tokens and negligible value claims

If a token you hold becomes worthless, you may not be able to sell it at all. GOV.UK says you can claim losses on assets you still own if they become worthless or of "negligible value".

HMRC's Cryptoassets Manual explains how this applies to crypto:

• A negligible value claim lets you be treated as having disposed of and immediately reacquired the tokens, crystallising a loss.
• Because tokens are pooled, the claim is made for the whole Section 104 pool of that token, not individual tokens.
• The claim needs to state the asset, the amount it should be treated as disposed of (which may be nil) and the date of the deemed disposal.
• The resulting loss needs to be reported, and the claim can be made at the same time.
• If tokens were already worthless when you acquired them, a negligible value claim will not be allowed.

Lost private keys, scams and collapsed exchanges

Lost private keys

HMRC's view is that misplacing a private key does not count as a disposal, because the tokens still exist. However, if it can be shown that there is no prospect of recovering the key or accessing the tokens, HMRC says a negligible value claim could be made.

Theft, hacks and scams

HMRC does not consider theft to be a disposal, as the owner still owns the stolen asset and has a right to recover it. This means victims of theft generally cannot claim a capital loss simply because tokens were stolen. HMRC also says that people who paid for tokens but never received them may not be able to claim a capital loss. Where tokens were received and later became worthless, a negligible value claim may be possible.

Collapsed platforms

When a platform fails, the position depends on the facts: what you held, whether you still have a claim in an insolvency, and whether you can show the asset has become of negligible value. There is no single answer, and we would always look at the details before advising on whether a loss can be claimed.

In all of these situations, keep evidence: transaction records, correspondence, police or Action Fraud reports and insolvency notices. Never share your seed phrase or private keys with anyone offering to "recover" funds.

Common crypto tax loss mistakes

• Not reporting losses because no tax was due that year, then missing the 4-year deadline.
• Using purchase price instead of pooled cost, which can overstate or understate a loss.
• Forgetting the 30-day rule when selling and buying back.
• Treating a price fall as a loss without a disposal or negligible value claim.
• Relying on software output unchecked; misclassified transfers often create phantom gains or losses. See our crypto tax pitfalls article.

Frequently asked questions

Can you claim crypto losses on taxes in the UK?

Yes. Capital losses on disposals of crypto can be claimed by including them on your tax return. They are set against gains in the same tax year, and any surplus can be carried forward to future years. GOV.UK says you can claim up to 4 years after the end of the tax year in which you disposed of the asset.

Are crypto losses tax deductible against my salary?

Generally not. For individuals, capital losses on crypto are set against capital gains rather than income such as employment earnings or staking rewards taxed as income. Different rules may apply in some situations, such as trading or company holdings, so the treatment depends on your circumstances.

What happens if my tokens become worthless?

If tokens become worthless or of negligible value while you own them, you may be able to make a negligible value claim. You are treated as disposing of and reacquiring the whole pool of that token, crystallising a loss that you then report. A claim is not allowed if the tokens were already worthless when you acquired them.

Can I claim a loss on stolen or scammed crypto?

HMRC does not treat theft as a disposal, because you still own the asset and have a right to recover it, so a capital loss is not generally available for theft alone. HMRC also says that if you paid for tokens you never received, you may not be able to claim a loss.

Do I have to report crypto losses if I have no gains?

You do not pay tax on losses, but if you want to use them against future gains you need to claim them, generally within 4 years of the end of the tax year of the disposal. Reporting them in good time keeps them available for later years.

Making the most of your crypto losses

Crypto losses can be valuable, but only if they are calculated correctly and claimed in time. If you would like us to work out your gains and losses, check whether any earlier losses can still be claimed, or review an existing crypto tax report, please get in touch.