What Counts as a Crypto Loss?

A crypto loss happens when the amount you receive from disposing of your crypto is less than what you originally paid for it. HMRC refers to this as an allowable loss (selling or disposing of an asset that is liable to Capital Gains Tax), and you can use it to reduce your future capital gains tax bill.

Typical situations where a crypto loss occurs:

• Selling crypto for less than you bought it for
• Swapping one crypto for another when the value has dropped
• Disposing of an NFT or token that has lost most or all of its value

Example: Selling at a Loss

Explanation: This disposal creates a £2,000 capital loss. You can report it to HMRC and offset it against gains either in the same tax year or in the future.

How to Offset Crypto Losses & Reduce Your Tax Bill

Once you have an allowable loss, you can use it to reduce your taxable gains. Losses can be applied in the same tax year or carried forward to future years if your gains are not high enough to use them all at once.

HMRC applies losses to your gains before deducting your annual Capital Gains Tax allowance (£3,000 for 2025-26). This means reporting losses is important, even if you are under the allowance, because they may save you tax in the future.

Example: Offsetting Losses Against Gains

Explanation: The sale of ETH creates a £700 loss (£1,800 − £2,500), while the BTC trade produces a £1,500 gain (£5,000 − £3,500). When combined, the total taxable gain for the year is reduced to £800. Instead of being taxed on the full BTC profit, the ETH loss offsets part of it, ensuring only the true net profit is taxed.

Tip: CoinTracking automatically offsets your reported losses against gains and applies HMRC’s rules, so you do not need to calculate them manually.

Types of Crypto Losses You Can Claim

Not every crypto loss is recognised by HMRC, but many common situations do qualify as allowable losses if reported correctly.

Trading or Investing Losses

The most straightforward case is when you sell crypto for less than you paid. These losses are always allowable, as long as the transaction is reported to HMRC. See the example in the previous section.

Losses from Hacks or Theft

If your crypto is stolen or lost in a hack, HMRC does not normally allow you to treat this as a disposal. However, you may be able to make a “negligible value claim” if you still own the asset but it has become worthless or inaccessible. This converts the loss into an allowable capital loss.

Frozen Exchange Accounts

If an exchange collapses or freezes withdrawals, your crypto may become inaccessible. HMRC again does not allow this as an immediate disposal, but you may claim negligible value if it is clear your assets have no realistic chance of recovery.

Scams (e.g., Rug Pulls)

Losing money in scams such as rug pulls is unfortunately common. HMRC guidance is strict: these losses are not usually allowable, because you never owned a genuine asset to begin with. However, in limited cases, if a token initially had value but later collapsed, a negligible value claim may still apply.

Depreciated Assets Like Worthless NFTs

If an NFT or token becomes worthless, you can make a negligible value claim. This allows you to treat the asset as disposed of and reacquired at zero value, thereby crystallising a loss you can set against gains. For more on how NFTs are taxed in the UK, see our UK NFT Tax Guide.

Tip: Handling different types of crypto losses can be complex, especially when making negligible value claims or reporting across multiple tax years. If you want professional help, the CoinTracking Full-Service connects you with experienced tax experts who can review your transactions, prepare HMRC-compliant reports, and guide you through difficult cases.

When to Claim Losses: Crypto Tax Loss Harvesting

Claiming crypto losses at the right time can make a big difference to your overall tax bill. This strategy is called tax loss harvesting. It means deliberately realising losses by disposing of crypto at a lower price, so they can be used to offset current or future gains.

Info: Offsetting losses is just one way to lower your tax bill. For more strategies, see our guide on How to Reduce Crypto Taxes in the UK Legally.

How Tax Loss Harvesting Works in the UK

You can sell crypto at a loss and then use that loss to reduce your taxable gains. However, HMRC applies the same-day and 30-day matching rules, which stop investors from selling and immediately rebuying the same asset just to claim a loss.

• Same-day rule: If you sell and rebuy the same crypto on the same day, the transactions are matched and the loss may not be realised.
• 30-day rule: If you repurchase the same crypto within 30 days of selling, the disposal is matched with the repurchase rather than your older holdings. This can reduce or even eliminate the loss.
• Section 104 pooling: If you wait more than 30 days, the sale is matched against your pooled holdings, and the loss is locked in.

Example: Tax Loss Harvesting with the 30-Day Rule

Explanation: The sale on 15 August shows a £5,000 loss. But because the same amount of BTC was repurchased within 30 days, HMRC matches the disposal with the £11,000 repurchase instead of the original cost. This means the actual recognised loss is only £1,000, not the full £5,000.

Reporting Crypto Losses to HMRC

To benefit from crypto losses, you must report them to HMRC. If you do not report them, you cannot offset them against current or future gains. Losses are reported through the Self Assessment tax return, which can be filed either online or by paper return. When reporting capital gains or losses, you must complete:

• SA100 – the main Self Assessment form
• SA108 – the Capital Gains Tax summary form

How to fill out Form SA100 – Self Assessment

The SA100 is your main tax return form. Here you declare your income, pensions, allowances, and other tax details. When you have crypto disposals to report, you must tick box 7 to indicate you have capital gains.

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Note that HMRC provides additional support in the form of the Tax summary notes and dedicated online guidance to help you complete the SA108.

Official guidance: Get help filling in your Self Assessment tax return

How to fill out Form SA108 – Capital Gains Tax

The SA108 Capital Gains Tax form is where you declare your crypto disposals, gains, and losses. It contains a dedicated section for cryptoassets as well as an additional section for losses and adjustments. Both are important if you want to make full use of your losses. 

Note that HMRC provides additional support in the form of the Capital Gains Tax summary notes and dedicated online guidance to help you complete the SA108.

Cryptoassets Section

The Cryptoassets section is where you declare the totals of your gains and losses from selling, swapping, or otherwise disposing of crypto:

• Box 13.1 – Number of disposals
  Enter the total number of crypto disposals you made in the year (sales, swaps, spending).
• Box 13.2 – Disposal proceeds
  Enter the total amount you received for your disposals. For example, if you sold 1 ETH for £1,800 and 0.2 BTC for £5,000, you would enter £6,800.
• Box 13.3 – Allowable costs (including purchase price)
  Enter the total costs of acquiring your crypto and any transaction fees. This figure is used to calculate your gain or loss.
• Box 13.4 – Gains in the year, before losses
  Enter your total gains before subtracting losses.
• Box 13.5 – Losses in the year
  Enter the total amount of your allowable crypto losses. For example, if you sold ETH at a £700 loss, this would be recorded here.
• Box 13.6 – Claims and elections
  Leave blank unless you are making a special claim, such as claiming negligible value for worthless tokens or NFTs.
• Box 13.7 – Total gains or losses reported in Real Time Transactions
  Enter amounts if you already reported crypto disposals during the year using HMRC’s real-time CGT service.
• Box 13.8 – Tax on gains already paid
  If you paid tax through the real-time service, record it here so you are not double- charged.

Info: Since the form requires totals, not individual transactions, CoinTracking makes this process much easier by generating HMRC-compliant reports and calculating disposals, gains, and losses automatically.

Losses and Adjustments Section

This section ensures your losses are carried forward or applied correctly:

• Box 45 – Losses brought forward and used in-year
  Enter earlier crypto losses now being used against this year’s gains.
• Box 46 – Income losses of 2024-25 set against gains
  Rarely relevant for crypto.
• Box 47 – Losses available to be carried forward
  If your losses are larger than your gains, enter the unused amount here. These can be carried forward indefinitely.
• Box 48 – Losses used against an earlier year’s gain
  If you are applying losses to a prior year’s gain, enter the amount here.
• Boxes 49–50.1 on Investors’ Relief and Business Asset Disposal Relief
  Not relevant for crypto.

Filling out the SA100 and SA108 correctly is crucial to make sure your losses are recognised by HMRC. If you’re unsure how to complete these forms, the CoinTracking Full-Service can help. Our tax experts review your data, generate HMRC-ready reports, and assist you step by step with filing.

Deadlines for Filing Your Crypto Tax Return

If you have crypto gains or losses to report, you must meet HMRC’s Self Assessment deadlines. The following dates apply to the 2024-25 tax year, which runs from 6 April 2024 to 5 April 2025:

• Paper returns: 31 October 2025
• Online returns: 31 January 2026

If your return is late, you’ll be charged a £100 penalty. If your return is more than 3 months late, HMRC may also apply daily penalties of £10. Interest and further penalties can apply if tax remains unpaid. For more details on penalties, see our guide: What Happens If You Don’t Report Crypto to HMRC?