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Crypto Losses and Negligible Value Claims in the UK
Learn how UK crypto capital losses, income losses and negligible-value claims differ, when losses can be used and what evidence HMRC may require.
A fall in token price is not automatically an allowable loss. Usually there must be a disposal or a valid claim, and income losses follow different rules from capital losses.
TL;DR
- A fall in token price is not automatically an allowable loss. Usually there must be a disposal or a valid claim, and income losses follow different rules from capital losses.
- Keep contemporaneous GBP valuations and evidence for income, acquisitions and disposals.
- Use current HMRC guidance and obtain qualified advice for the facts of your operation.
Capital loss or income loss
Investment disposals normally produce capital gains or losses. A qualifying trading or miscellaneous-income loss is governed by Income Tax rules. Classify the activity before trying to offset the amount.
Using capital losses
Allowable losses are first set against gains for the year. Unused losses can generally be carried forward once properly notified, subject to the rules in force. Keep the calculation and evidence for each disposal.
Negligible-value claims
A negligible-value claim can sometimes treat an asset as disposed of and immediately reacquired where it has become worth next to nothing. Conditions, timing and evidence matter. A token that is merely volatile or temporarily illiquid does not automatically qualify.
Lost keys and failed platforms
Losing access to a private key is not necessarily a disposal because ownership can remain. An exchange or counterparty failure may create a different legal asset or claim. Establish what is owned and recoverable before applying tax treatment.
Mining-business losses
A trading miner may have business-loss rules available, while non-trading mining receipts may fall under miscellaneous income. Obtain advice before setting losses against other income or gains.
Useful next steps
Authoritative references
Use current official guidance because tax rules and HMRC guidance can change.
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