Is Crypto Foreign Income? SA106, Where HMRC Says Your Tokens Are Located, and What Goes Where

Every year UK residents complete SA106 (foreign income) pages for their Binance gains because the exchange is overseas, or leave crypto off entirely because "it's not in the UK". Both are wrong, and the reason is a single paragraph of HMRC guidance about where a token is.

HMRC's rule on location: CRYPTO22600

The Cryptoassets Manual at CRYPTO22600 sets out HMRC's view that exchange tokens are located, for tax purposes, wherever their beneficial owner is resident. Not where the exchange is incorporated, not where the validators are, not where the private key sits. If you are UK resident, HMRC says your Bitcoin is a UK asset.

HMRC's reasoning is that a token has no physical existence and no underlying asset, so the traditional situs rules for shares (place of register) or debts (residence of debtor) do not fit. Falling back on the owner's residence gives a single, workable answer. The view is HMRC's own and has not been tested in the courts, but it is the basis on which HMRC administers the tax, and it is the rule you file under.

What that means for your return

Gains on crypto are not foreign gains. A UK resident selling ETH on Kraken has made a disposal of a UK-situated asset. It goes on SA108 (capital gains summary) exactly like a disposal on a UK exchange would. There is no foreign element to declare and nothing for SA106.

Staking and airdrop rewards are not foreign income. They are miscellaneous income arising on a UK-situated asset and go on SA100 box 17 ("Other taxable income"), with a note in the description box that they are cryptoasset rewards. Again, not SA106.

SA106 is for foreign income and foreign tax credits. Its capital gains section covers assets that are actually foreign, and its income sections cover foreign employment, property, dividends and interest. Putting Binance gains there does not make them wrong in amount, but it mis-describes them, attracts questions, and can lead you to claim a foreign tax credit you are not entitled to.

The exceptions that do involve SA106

There are a few situations where a crypto holder genuinely needs the foreign pages:

• Foreign tax actually withheld. If an overseas platform deducted tax at source from rewards — unusual, but some jurisdictions require it — you may be able to claim relief under the relevant double tax treaty. That claim is made on SA106, with HS263 as the helpsheet.
• Interest from a foreign company. Where a platform's terms make its "earn" product a loan to a foreign company and the return is legally interest rather than a staking reward, it may be foreign interest. HMRC's DeFi guidance at CRYPTO61000 onwards is where that analysis lives, and it is fact-specific. Most retail "earn" products are reported as miscellaneous income in practice.
• You were non-resident for part of the year. Split-year treatment and temporary non-residence rules can pull gains into or out of charge. The leaving the UK guide covers the mechanics; the residence pages are SA109, not SA106.
• Shares in a crypto company, or a crypto ETF. A Coinbase share or a Bitcoin ETP listed in Frankfurt is a foreign security with ordinary situs rules. Those are foreign assets and gains on them do go on SA106 if the pages apply to you.

Why the location rule also matters for Inheritance Tax

Because HMRC treats tokens as situated where the owner lives, a UK-domiciled — since April 2025, a long-term UK resident — holder's crypto is within the UK Inheritance Tax net regardless of where it is held. Conversely a non-resident's crypto is, on HMRC's view, outside the UK and outside IHT. The crypto inheritance tax guide has the detail.

The new arrivals point: FIG regime from 6 April 2025

From 6 April 2025 the remittance basis was replaced by the Foreign Income and Gains (FIG) regime, which exempts qualifying new arrivals from UK tax on foreign income and gains for their first four years of residence. Under HMRC's situs view, a newly arrived resident's crypto is UK-situated the moment they become resident, so the gains are not foreign and are not covered. The point is contested — the Cryptoassets Manual states a view, not settled law — and anyone relying on FIG for crypto gains should take advice rather than assume either answer. It is one of the seven judgement calls in the calculator vs accountant guide.

Worked example: filing a Binance year

A UK resident, no other complications, during 2025/26:

• Sold BTC and ETH on Binance: total proceeds £41,000, allowable cost £29,000, net gain £12,000.
• Received Binance staking rewards worth £900 across the year.
• Binance withheld no tax.

Return: SA100 with box 17 showing £900 and a description "cryptoasset staking rewards"; SA108 showing 2 or more disposals, £41,000 proceeds, £29,000 costs, £12,000 gains, less the £3,000 annual exempt amount (TCGA 1992 s.1K) leaves £9,000 taxable at 18% or 24% depending on other income. No SA106. No foreign tax credit. The fact that Binance is not a UK company is irrelevant to every box.

Had the same person been using a UK-regulated exchange, the return would be identical. That is the whole point of the residence-based rule.

Currency: everything in sterling on the day

One thing that does look "foreign" is the currency. Most exchanges quote in USD or in the token itself. HMRC requires every figure in sterling, converted at the exchange rate on the day of the transaction (CRYPTO22100 and the general rule at CG78300 onwards). Use a consistent, documented source. A USD-denominated Binance export converted at a single year-end rate is not acceptable; each transaction needs its own rate. Tools do this automatically — cryptolens.uk prices every leg in GBP at the transaction date — but if you are working from a spreadsheet, the daily rate is the step people skip.

Four common mistakes

Claiming a "foreign tax credit" for exchange fees or withholding that never happened. A credit under a treaty requires tax actually paid to a foreign authority, evidenced. Binance's trading fee is not tax.

Leaving crypto off because the exchange is abroad. The residence-based situs rule means the gain is UK-situated and fully within charge from the first pound. There is no "arising basis only if remitted" for crypto, and since April 2025 the remittance basis no longer exists for anyone.

Reporting USD figures. Every box on SA108 is in pounds. A gain computed in dollars and converted once at the year-end rate can be materially wrong when sterling has moved during the year; HMRC expects the rate on each transaction date.

Using SA106 for staking rewards from an overseas platform. They are miscellaneous income arising on a UK asset. The description box on SA100 is where you say what they are.

Where non-residents stand

The rule cuts both ways. Someone who is not UK resident holds, on HMRC's view, non-UK-situated tokens. Disposals are outside UK CGT entirely, unless the temporary non-residence rules in TCGA 1992 s.10A bring them back into charge on return within five years. Rewards received while non-resident are foreign income to a non-resident and not taxed here. The moment residence is regained, the tokens become UK-situated again. None of that requires any action on an exchange; it follows the person.

Checklist

• Crypto gains: SA108, not SA106.
• Crypto rewards: SA100 box 17, not SA106.
• Foreign tax actually deducted from rewards: SA106 with a treaty claim, rarely relevant.
• Non-resident for part of the year: SA109.
• Shares or ETPs in crypto companies: ordinary securities rules; SA106 if foreign.
• All figures converted to sterling per transaction.

This is general information, not personal tax advice.