As cryptocurrency becomes more mainstream, more people are being paid for their work, side gigs, or freelance projects in digital assets like Bitcoin, Ethereum, or USDT. But if you’ve been paid in crypto, one question looms large:
Do I have to pay tax on it?
The short answer is yes — in the UK, getting paid in cryptocurrency isn’t tax-free, and HMRC is keeping a close eye on it. At King and Taylor, we help individuals and businesses navigate exactly these kinds of modern tax challenges.
Why Crypto Payments Are Still Taxable
HMRC doesn’t treat cryptocurrency as money. It classifies it as a digital asset — and when you’re paid in crypto, it’s treated just like any other form of income.
That means if you receive payment for services in crypto — whether you’re a freelancer, contractor, or even running a small business — it counts as taxable income and needs to be declared in your Self Assessment tax return.
Even if the crypto hasn’t been converted to pounds yet, HMRC wants to know its value in GBP at the time you received it.
What Taxes Might You Owe?
Depending on how you received and used the crypto, you might need to consider:
Income Tax
If you’re paid in crypto for your work, it’s treated the same as getting paid in cash — you’ll owe Income Tax and potentially National Insurance on the GBP-equivalent value at the time of payment.
Capital Gains Tax (CGT)
If you later sell, trade, or convert the crypto and it has gone up in value since you received it, you may owe CGT on the gain.
So you could be taxed:
- When you earn the crypto (as income)
- Again when you dispose of it (as a capital gain)
At King and Taylor, we regularly help clients work through these tax implications to avoid surprise bills — and fines.
Example: Being Paid in Bitcoin
Let’s say you design a website for a client and agree to be paid in Bitcoin.
- At the time of payment, 0.01 BTC is worth £500. You’ll need to declare £500 as income.
- A few months later, you sell that 0.01 BTC when it’s worth £700. Now you have a £200 gain — and that may be subject to Capital Gains Tax (depending on your total annual gains).
Without proper tracking, these numbers can get messy fast. That’s why keeping accurate records is essential.
What Records Do I Need to Keep?
HMRC expects you to keep detailed records of:
- The date you received crypto
- The value in GBP at that time
- Any sales, conversions, or trades
- Any fees associated with transactions
If that sounds like a headache — don’t worry. At King and Taylor, we help clients set up simple systems to keep track of their crypto income and make tax returns stress-free.
What If You’re Mining or Staking Crypto?
If you earn crypto through mining, staking, or airdrops, the tax rules can vary depending on the activity’s complexity and regularity. In some cases, it’s treated as income; in others, it may fall under capital gains.
Either way, HMRC wants to know — and ignoring it isn’t a safe option. As crypto reporting rules tighten globally, platforms are increasingly sharing data with tax authorities.
How King and Taylor Can Help
If you’ve been paid in crypto — even just once — it’s a smart idea to get some professional advice. The rules aren’t always straightforward, and the tax implications can snowball fast if you’re not keeping on top of them.
At King and Taylor, we stay ahead of the curve when it comes to digital assets. Whether you’re a freelancer, investor, or business owner accepting crypto payments, we can:
- Help you declare your income properly
- Calculate any capital gains owed
- Put record-keeping systems in place
- Make sure you stay compliant (and avoid penalties)
Final Thoughts
Yes, you do have to pay tax if you’re paid in cryptocurrency — but with the right support, it doesn’t have to be complicated.
If you’ve got crypto-related income and you’re not sure what to do next, get in touch with King and Taylor today. We’ll help you sort it, stay compliant, and keep more of what you earn.
