Which crypto transactions are taxable events?

A taxable event

A taxable event is something that can create tax to pay. For crypto, the main one is a disposal: getting rid of crypto in any way. HMRC calls disposal "a broad concept", and says you need to work out your gain or loss each time you dispose of tokens.²

The US list

US federal income tax returns ask a yes-or-no question about digital assets. It asks whether, during the year, you received digital assets (as a reward, award or payment), or sold, exchanged or otherwise disposed of them.⁵

The IRS says you answer "Yes" if, for example, you:⁵

• sold digital assets for US dollars or another currency;⁵
• swapped them for another digital asset, including a stablecoin;^5,1
• used them to pay for property, goods or services, of any amount;^5,1
• paid a transfer fee with digital assets;⁵
• received them as pay, as a reward, from mining or staking, or from an airdrop linked to a hard fork.⁵

The IRS FAQs say each sale, swap for a different digital asset, or payment gives a capital gain or loss.¹ You must report your digital asset transactions even when they give no gain or loss.⁵

You answer "No" if you only held digital assets, only bought them with dollars, or only moved them between wallets or accounts you own or control without paying a fee in crypto.⁵

The UK list

HMRC's list of disposals is very similar. It includes:²

• selling tokens for money;²
• exchanging tokens for a different type of token;²
• using tokens to pay for goods or services;²
• giving tokens away to another person, unless the gift is to your spouse or civil partner.²

GOV.UK guidance adds gifts to charity to that exception.⁶ Buying tokens is not taxed: HMRC says you do not pay tax on tokens when you buy them, but may when you sell them.⁷

When you give tokens away, HMRC treats you as if you had received their value in pounds, even though you received nothing.²

Moving between your own wallets

Both authorities say moving crypto between wallets you own is not a disposal. HMRC says there is no disposal if you keep beneficial ownership the whole time, for example moving tokens between public addresses you control.² The IRS says such a move is a non-taxable event.¹

But watch the fee. The IRS treats any digital assets you use to pay for the move as disposed of.¹ More generally, when you pay a network fee in crypto, you have disposed of the crypto used for the fee.¹

Gifts you receive

In the US, if you receive crypto as a genuine (bona fide) gift, you have no income until you sell, swap or otherwise dispose of it.¹ The IRS points people who give crypto as a gift to Form 709, the US gift tax return.⁵