Cryptocurrency is taxable in most countries. In the USA, it’s treated as property (capital gains tax). In the UK, HMRC taxes crypto as capital assets. In Kenya, KRA taxes crypto profits as income. This guide covers all three.
- Records of all crypto transactions (buy, sell, swap, income)
- Exchange transaction histories or CSV exports
- Cost basis records (what you paid for each crypto)
USA: Report crypto on Form 8949 and Schedule D
The IRS treats cryptocurrency as property. Every sale, swap, or payment with crypto is a taxable event. Report each transaction on Form 8949. Short-term gains (held less than 1 year) are taxed as ordinary income. Long-term gains (1+ years) are taxed at 0%, 15%, or 20%.
UK: Report on Self Assessment under Capital Gains
HMRC treats crypto as a capital asset. Report on the Capital Gains pages of your Self Assessment return. Annual CGT allowance (£6,000 in 2023/24) applies. Crypto-to-crypto swaps are also taxable events — not just GBP sales.
Kenya: KRA taxes crypto as income
The Kenya Finance Act 2023 introduced a 3% digital asset tax on the gross value of crypto transactions. Pay through the iTax portal under “Digital Asset Tax.” Additionally, any business income from crypto trading is taxable at standard income tax rates.
Use crypto tax software to calculate gains accurately
Manual calculation is nearly impossible with hundreds of transactions. Use: Koinly (supports 400+ exchanges, generates IRS/HMRC/global reports), CoinTracker, or TaxBit. Connect your exchange accounts via API or upload CSV files. The software calculates your gains, losses, and tax liability automatically.
Keep records even for losses
Crypto losses can offset other capital gains — potentially reducing your overall tax bill. Document all losses. In the USA, up to $3,000 of net capital losses can be deducted against ordinary income annually, with the rest carried forward.
Frequently Asked Questions
No — transferring crypto between your own wallets is NOT a taxable event (USA or UK). However, you must be able to prove both wallets belong to you. Keep records of all wallet addresses you own.
File amended returns (USA: Form 1040-X, UK: amend Self Assessment) as soon as possible. Voluntary disclosure typically results in no criminal prosecution. Waiting until the tax authority contacts you is much more expensive — penalties and interest compound.
Koinly automatically calculates your crypto taxes from 400+ exchanges and wallets. Free plan available, paid from $49/year.