Year-End Tax Planning: How UK Crypto Investors Can Optimise Taxes Before 5 April 2025

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Disclaimer

This guide is intended as a generic informative piece. This is not accounting or tax advice that can be relied upon for any UK individual’s specific circumstances. Please speak to a qualified tax advisor about your specific circumstances before acting upon any of the information in this article.

As we approach the end of the 2024/25 tax year, crypto investors in the UK need to be proactive in managing their tax liabilities. With tax-free allowances shrinking and the Capital Gains Tax (CGT) rates increasing mid-year, there’s a lot to consider before 5th April. In this blog, we’ll walk through key tax-saving opportunities and practical steps you can take now to optimise your crypto tax position before the year is up.

TL;DR: Tax Optimisation Ideas

✔ Use your annual allowance of £3,000 or lose it

✔ Offset any gains with losses

✔ Consider transferring crypto to your spouse

✔ Plan disposals in line with your total annual income

✔ Be savvy about the 2024/25 split tax year

What changed in the 2024/25 tax year?

The 2024/25 tax year brought significant changes for UK crypto investors. In addition to the reduced Capital Gains Allowance, the government also announced a sharp increase to the Capital Gains Tax rate in the Autumn Budget of 2024. Let’s explore how these changes affect crypto investors with examples to illustrate…

Lower Capital Gains Allowance

The Annual Exempt Amount (AEA) is a tax-free allowance for UK individuals liable for Capital Gains Tax. You only pay CGT if your total gains for the tax year (after deducting any losses and applying any reliefs) exceed this allowance. The UK government has steadily reduced the CGT allowance over recent years, making it more important than ever to plan your crypto disposals carefully:

• 2022/23: £12,300 CGT allowance
• 2023/24: £6,000 CGT allowance
• 2024/25: Only £3,000 CGT allowance

In 2022/23 an individual could reap over £12,000 in crypto profits tax-free; by 2024/25, only £3,000 of gains are exempt. That’s a significant drop! For active investors used to taking small profits falling within the tax-free allowance, the reduction means you need to be more conscious of triggering a tax liability.

Higher CGT Rate & Split Tax Year

A unique factor of 2024/25 is the split tax year with two different CGT rate periods. The Autumn Budget on 30th October 2024 raised CGT rates effective immediately, meaning any gains realised after 29 October 2024 are taxed at the new higher rates. HMRC requires you to calculate your total crypto gains separately for the two portions of the year and apply the respective tax rates to each.

Gains before 30 October 2024:

• Basic-rate taxpayers – 10%
• Higher-rate taxpayers – 20%

Gains from 30 October 2024:

• Basic-rate taxpayers – 18%
• Higher-rate taxpayers – 24%

Choosing where to apply the Capital Gains allowance

One positive aspect of the split tax year is that you can choose where to apply your Annual Exemption Amount. A strategic move would be to use it to offset gains made after 30 October, as these are taxed at a higher rate.

Example: How the split year impacts your tax bill

Let’s say you realised a £10,000 gain from selling crypto.

Disposal before 30th October 2024:

After deducting the £3,000 allowance from your gain, £7,000 is taxed at 10% (basic rate) or 20% (higher rate). So a basic-rate taxpayer would owe £700 in tax.

Disposal after 30 October 2024:

The £7,000 taxable gain is now taxed at 18% (basic rate), increasing your tax bill to £1,260.

Smart Tax Strategies for UK Crypto Investors Before 5 April 2025

With the deadline fast approaching, here are actions to consider before the tax year ends.

1. Use Your £3,000 CGT Allowance – Before You Lose It

Each tax year, individuals can realise up to £3,000 in capital gains tax-free, but this allowance doesn’t roll over – if you don’t use it, you lose it. If you’re planning to take profits from crypto, consider spreading sales across multiple tax years to make the most of your allowance.

Tip: If you have more than £3,000 in gains to take, you might consider selling some crypto before 5 April 2025 to use this year’s allowance, then selling more after 6 April 2025 to use next year’s allowance.

2. Offset Crypto Gains with Losses

Many crypto investors have experienced losses in recent years (for example, during market downturns or exchange collapses). These capital losses can be your ally in tax optimisation. You can offset losses against your gains to reduce the amount of gain that is taxable.

✅ For the same tax year, any crypto losses must be deducted from your gains first, even if that means you don’t fully use the annual allowance (current-year losses can’t be held back).

✅ Losses from previous years (if reported to HMRC) can be carried forward indefinitely to offset future gains.

💡 Losses carried forward can be applied strategically - you only need to use enough of your brought-forward losses to reduce your net gain to the level of the annual exempt amount. Any remaining losses can continue to be carried forward.

Beware the 30-day rule!

If you sell a crypto asset at a loss and repurchase the same asset within 30 days, HMRC will disallow the loss for tax purposes. Instead, you could repurchase a different crypto asset or wait out the 30-day period.

Example

If you carried forwards £10,000 losses from 2023/24 and have a £8,000 gain in 2024/25, you can use use those losses to reduce your taxable gain from £5,000 (after the £3k allowance) – leaving no taxable gain and £5,000 of losses still available to carry forward.

Harvest crypto losses

Before the tax year ends, review your portfolio for any crypto positions that are in loss. Consider selling those assets before 5 April to crystallise a loss that can be used to offset other gains in the year.

3. Consider Transferring Crypto to Your Spouse

If you’re married or in a civil partnership, remember that transfers of assets between spouses are not taxable. You can gift crypto to your spouse tax-free, allowing them to sell using their own £3,000 allowance.

✅ You can effectively double the tax-free CGT allowance by using both partners’ allowances (£3,000 each = £6,000 total tax-free gains).

Lower rate tax payers

This strategy is especially useful if one spouse is a lower rate taxpayer - transferring crypto to the partner in the lower tax bracket before selling could result in a lower CGT rate. If large gains are at play then be cautious about affecting total annual income and crossing the tax rate boundary.

4. Plan Crypto Disposals in Line with Your Income Tax Bracket

Since CGT rates depend on your income tax bracket, the timing of your crypto disposals matters. Basic-rate taxpayers now pay 18% CGT, while higher-rate taxpayers pay 24% CGT. If you’re on the cusp of the £50,270 income threshold (the point at which the higher CGT rate tax kicks in), consider if a disposal might nudge you into it. While you’ll only be taxed the higher rate on capital gains over the threshold, delaying disposals until the following year could reduce your tax bill significantly.

Reducing your taxable income, for instance, making additional pension contributions or charitable donations could also keep your income within the basic band, meaning your crypto gains get taxed at 18% instead of 24%.

Similarly, if you have flexibility on the timing of certain income (bonuses, dividends, etc.), deferring income to another year might preserve your lower CGT rate for the current year. Essentially, managing your income level ensures you make maximum use of the basic rate band for cheaper capital gains tax.

Avoiding the Higher Capital Gains Tax Rate

If you’re close to the higher-rate tax threshold, selling crypto gradually, rather than all at once, may help you remain within the basic tax bracket and avoid the higher 24% CGT rate.

5. Be savvy about the 2024/25 split tax year

The split tax year means you must file gains for the pre- and post-split periods to be taxed at different rates. Since gains after 30 October 2024 are taxed at the new higher tax rates, strategically using your CGT allowance and any losses brought forward during this post-split period may help minimise your overall tax bill.

How Recap Helps You Proactively Manage Your Crypto Tax Position

Understanding your tax position before the end of the 2024/25 tax year is crucial, and Recap makes this easy. Our dashboard gives you real-time insights into your realised and unrealised gains, helping you make informed decisions about how to use your allowances before the tax year ends on 5th April 2025.

✅ Track realised gains: Instantly see how much of your tax-free CGT allowance you’ve used and what’s left.

✅ Identify tax-saving opportunities: Spot unrealised gains/losses that can help you plan tax-efficient disposals.

✅ Stay compliant: Recap automatically applies HMRC’s share pooling rules, ensuring accurate tax reporting without the hassle.

✅ Collaborate with your accountant: we always recommend getting advice about tax optimisation from a tax professional before committing to any disposals and with Recap you can easily and privately share your portfolio with them to discuss opportunities.

Final Thoughts: Plan Now, Save Tax Later

The UK tax landscape for crypto is getting stricter and 2024/25 exemplifies this. The Autumn Budget 2024 changes increased tax rates and signal HMRC’s intent to close gaps – we know that crypto is a big part of that. Nudge letters have been sent to crypto holders urging compliance and from the 2024/25 self assessment tax return, crypto is no longer grouped with capital gains, it will need to be declared separately.

With tax-free allowances shrinking and rates increasing, it’s more important than ever to be proactive in managing your crypto tax bill. Always keep detailed records of your crypto transactions and calculations of gains/losses - if that feels overwhelming, our platform and support team is here to help.

Before the end of the tax year - 5th April 2025, take time to review your portfolio. With proper planning – using your allowances, strategically timing sales, and leveraging losses – you can optimise your tax outcome and avoid overpaying. Make tax optimisation a part of your overall crypto investment strategy to keep more of your hard-earned returns!

2025 Year-End Tax Planning FAQs

How can I reduce my crypto tax bill before the end of the tax year?

To reduce your crypto tax liability before the end of the tax year (5th April 2025) you could:

• Offset gains with losses – if you have unrealised losses, selling those assets before 5 April can lower your taxable gains.
• Time your disposals wisely – selling crypto when your total income is lower may reduce your CGT rate.
• Transfer assets to a spouse – using both partners’ CGT allowances can double tax-free gains to £6,000.

What is the split tax year and how does it affect my crypto gains?

The UK Autumn Budget 2024 introduced new Capital Gains Tax (CGT) rates effective immediately, creating a split tax year for 2024/25:

• Before 30 October 2024: CGT rates - 10% basic, 20% higher.
• From 30 October 2024: CGT rates - 18% basic, 24% higher.

Crypto disposals must be calculated and reported separately for each period, with the correct tax rate applied. To minimise your tax bill, it may be beneficial to apply your CGT allowance and any brought-forward losses to the higher-tax period (post-30 October) where they can offset gains taxed at the new, higher rates.

How does Recap help with end of year tax planning?

Recap provides real-time tracking of your realised and unrealised gains, helping you:

• Monitor how much of your CGT allowance you’ve used.
• Identify tax-saving opportunities before the tax year end on 5th April.
• Automatically apply HMRC’s share pooling rules for accurate reporting.
• Generate tax reports to simplify self-assessment filing.

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