Crypto Lost, Stolen or Rugged in the UK: How to Claim the Loss (HMRC TCGA s.24)

Losing crypto is grim, but most UK holders do not realise that some kinds of loss can be claimed as a capital loss and offset against gains. The rules are stricter than people assume — and a few common scenarios are not deductible at all. Here is how HMRC actually handles each case.

Lost private keys or seed phrase

Under HMRC's CRYPTO22500, simply losing the keys to a wallet is NOT a disposal. The asset still exists on-chain; you just cannot access it. HMRC's position is that you can make a negligible value claim under TCGA s.24 if you can show the asset is genuinely irrecoverable to you — but this is much harder than it sounds because the burden of proof sits with you.

Practical evidence HMRC has accepted: a written declaration of when the keys were lost, the wallet address, and screenshots showing the balance is intact but unmoved since the loss date. They want to see that you have not just "forgotten" temporarily.

Stolen crypto (hack, phishing, scam)

A theft is treated as a disposal at nil consideration on the date of theft — meaning you crystallise a capital loss equal to your cost basis. HMRC accepts a crime reference number from Action Fraud or your local police force as evidence. The disposal is reportable in the tax year the theft occurred, not when you discovered it.

If you later recover some of the stolen funds (rare, but it happens with traceable on-chain hacks), that recovery is treated as a new acquisition at the GBP value at recovery — not as a reversal of the original loss.

Exchange collapse — FTX, Celsius, Voyager

When an exchange enters administration, your claim against the estate is itself a chargeable asset. HMRC's view: you have not disposed of the crypto, you have exchanged it for a creditor claim. A negligible value claim is usually possible once the administrator confirms recovery will be a small fraction of book value. The crystallised loss equals cost basis minus expected recovery.

Rugged memecoins and dead projects

This is the most common case for active UK traders. A token that traded at £0.01 now trades at £0.0000001 with no liquidity and no team. To claim s.24 negligible value:

- The token must still be in your possession at the claim date (you cannot sell to a burn address and claim s.24 on the burned position — sell on-chain at near-zero proceeds instead). - You must claim in writing, specifying the token, the cost basis, and the date you consider it became negligible. - HMRC may push back on tokens with any remaining trading activity — "negligible value" means effectively zero, not just down 99%.

What is NOT deductible

A bad investment that fell 80% is still a real asset — sell it for whatever it is worth and crystallise the actual loss. "Forgotten" wallets that you later remember are not losses. Crypto sent to the wrong address can sometimes be recovered and is not automatically a loss.

CryptoLens flags negligible-value candidates from a wallet scan but never auto-claims them — the s.24 claim must be a deliberate filing decision with your evidence attached.