XRP Tax Guide UK
UK tax treatment of crypto is more straightforward than most holders fear, but it requires diligent record-keeping. This guide covers Capital Gains Tax on XRP disposals, the annual allowance, HMRC's section 104 pooling rules, what counts as a taxable event, and how to report. It is not personal tax advice — for that, speak to a UK chartered tax adviser.
How HMRC classifies XRP
HMRC's Cryptoassets Manual treats individual crypto holders as investors subject to Capital Gains Tax on disposals, not Income Tax on profits. This is the default. In rare cases (very high-frequency trading conducted as a business), HMRC may treat activity as trading subject to Income Tax — but this is unusual. For typical individual holders, CGT is what applies.
What counts as a 'disposal'
A disposal triggers a CGT event. Disposals include: selling XRP for fiat, swapping XRP for another crypto, using XRP to buy goods or services, gifting XRP to anyone other than a spouse, and certain DeFi interactions including some liquidity provision. Buying XRP and holding it is not a disposal. Moving XRP between wallets you control is not a disposal.
The annual CGT allowance
Every UK individual has an annual Capital Gains Tax allowance. For 2024/25 and 2025/26 the allowance is £3,000 — down from £12,300 in 2022/23 and £6,000 in 2023/24. Gains below the allowance are tax-free; gains above are taxed at 18% (basic rate income earners) or 24% (higher rate income earners) under the new 2024/25 rates. Spouses each have their own allowance, and inter-spouse transfers are CGT-free, which gives couples some planning flexibility.
Calculating the gain — section 104 pooling
HMRC requires UK holders to use the 'section 104' pooling method for crypto. All XRP of the same type are pooled into a single average-cost basis. When you sell, the gain is `sale proceeds - (sale amount × pool average cost)`. Two special rules apply: the 'same-day rule' (any buys and sells on the same day are matched first) and the '30-day rule' or 'bed and breakfasting' rule (sales matched against repurchases within 30 days). These prevent simple wash-sale tax avoidance.
Worked example
You buy 10,000 XRP at £0.50 (£5,000 spend) in January 2024, then another 5,000 XRP at £1.20 (£6,000 spend) in October 2024. Your section 104 pool is 15,000 XRP at average cost (£5,000 + £6,000) ÷ 15,000 = £0.733 per XRP. In March 2025 you sell 5,000 XRP at £2.00 — proceeds £10,000. Cost basis for that sale: 5,000 × £0.733 = £3,665. Gain: £10,000 − £3,665 = £6,335. Subtract the £3,000 CGT allowance: £3,335 taxable. At 24% (higher rate): £800.40 of CGT owed.
Records you need to keep
For every transaction: date, type of crypto, amount, GBP value at the time, what you paid in fees, and what the transaction was for (buy, sell, swap, payment). Exchange exports usually contain this data — download monthly and store offline. For self-custody activity, you need to record it manually. Crypto tax software (Koinly, Recap, CryptoTaxCalculator) automates the calculation if you connect your wallets and exchanges. Records must be kept for at least five years after the relevant tax return deadline.
Reporting and paying
If your total gains are below the annual allowance and your total proceeds are below the reporting threshold (4 × allowance, currently £12,000), you may not need to report. Above that, report via Self Assessment by 31 January following the tax year (so 2024/25 gains are reported by 31 January 2026). Pay any CGT owed by the same date. Late filing penalties apply.
Yield, airdrops and forks
Income from crypto lending or AMM yield is typically treated as miscellaneous income, taxed at your marginal income tax rate (20%, 40% or 45%). When you later sell those yield tokens, CGT applies to any further gain. Airdrops are generally not taxable on receipt unless given as payment for a service; they trigger CGT on disposal at proceeds minus zero (or minus a market value if you reported one on receipt). Hard forks similarly create new pools at zero base cost.