Getting Paid in Crypto UK: Salary and Freelance Tax Explained
How HMRC taxes salary, freelance income, and payments received in cryptocurrency in the UK — Income Tax, National Insurance, and the second CGT event on disposal.
More UK workers and freelancers are being paid in cryptocurrency, whether as a full salary, a freelance invoice, or a bonus. HMRC has clear rules: crypto received for work is taxed as income first, and then a separate Capital Gains Tax event applies when you dispose of those coins. Many people miss the second part.
Crypto pay is income at its GBP value on receipt
If you receive crypto in exchange for services, its GBP market value on the day you receive it is taxable income. How it's taxed depends on your status.
Employees: Crypto salary is treated like ordinary earnings. It is subject to Income Tax and National Insurance. If the token is a "readily convertible asset" — which most liquid coins are — your employer should run it through PAYE and account for tax and NICs, valuing the crypto in GBP at the point of payment.
Self-employed and freelancers: Crypto received for invoices counts as trading income. You include the GBP value on receipt in your Self Assessment turnover and pay Income Tax and Class 4 National Insurance on your profits in the normal way.
The second tax event: disposing of what you were paid
The GBP value taxed as income becomes the cost basis of those coins. When you later sell, swap, or spend them, you calculate a capital gain or loss against that figure. If the coin rose in value between payday and the day you sold, the increase is a capital gain subject to CGT (allowance £3,000 for 2025/26; rates 18% or 24%). If it fell, you may have an allowable loss.
A worked example
You're paid 1 ETH for a freelance project when ETH is worth £1,500. You declare £1,500 as income and pay Income Tax and NIC on it. Three months later you sell that ETH for £1,900. You have a £400 capital gain on top of the income already taxed. Two separate calculations, two separate tax types.
Why this trips people up
It feels like double taxation, but it isn't — income tax applies to the value you earned, and CGT applies only to the growth after you received it. Keeping the receipt-day GBP value for every crypto payment is essential, because it anchors both calculations. CryptoLens timestamps and prices each incoming payment and tracks the later disposal, keeping your income and capital gains figures cleanly separated.
This is general information rather than personal tax advice; if you're paid substantial amounts in crypto, consider speaking to an accountant.
Frequently asked questions
Is crypto salary taxed as income or capital gains in the UK?
Both, at different stages. The GBP value when you're paid is taxed as income (with National Insurance). Any later change in value when you dispose of the coins is then subject to Capital Gains Tax.
Does my employer handle the tax if I'm paid in crypto?
If the crypto is a readily convertible asset, employers generally must operate PAYE and account for Income Tax and NICs. Freelancers report crypto income themselves through Self Assessment.
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