How to Claim Crypto Capital Losses in the UK

Crypto disposal losses can qualify as allowable capital losses in the UK. They can reduce capital gains in the same tax year, with unused amounts carried forward under the normal rules. The catch is that a loss must be quantified and notified to HMRC before it is allowable.

Your portfolio is down. A token you bought at £2,000 is worth £400. That DeFi protocol you ape'd into pulled the rug. Your LP position bled out to impermanent loss. Most people miss this: those losses are worth money, but only if you report them correctly.

This guide explains how crypto losses work under UK tax law, how to notify and carry them forward, and the matching rules that can change the amount available. It focuses on losses from disposals. If you still hold a token that has become worthless, use the separate negligible value claim guide.

When does a crypto loss arise?

A capital loss arises when you dispose of a crypto-asset and the proceeds are less than the allowable cost. A disposal means selling, swapping, spending, or removing liquidity: anything where you give up a token in exchange for something else.

If the result is negative, you have a capital loss. Gas fees are an allowable cost, so they increase the loss, which is correct. HMRC treats them as incidental costs of disposal.

Worked example: a simple crypto loss

You bought 1 ETH on 15 March 2025 for £2,000. You sold it on 20 November 2025 for £1,500. Gas fee: £8.

That £508 loss can offset £508 of gains elsewhere in the same tax year, or carry forward to future years. But you have to report it, which brings us to the critical point.

Losses are not automatic: you must report them

To make a capital loss allowable, notify HMRC of a quantified amount. There is no separate loss-claim form. In practice, you can usually include the details in your Self Assessment return and supporting computations. If you complete the capital gains pages, SA108 includes the relevant loss and cryptoasset fields.

The normal claim time limit is four years after the end of the tax year in which the loss arose. A late notice will not normally make the loss allowable, so do not wait until a later gain creates a need for it.

Losses also matter when an HMRC nudge letter lands in the post. The letter is gain-focused, but a corrected return often surfaces previously-unbanked losses too. Our HMRC letter response guide walks through the response paths and the supporting working you'll need. If you're reconciling proactively before the May 2027 cross-match, see the CARF 2027 readiness page.

How losses offset gains: same-year vs carry-forward

There are two different regimes, and they work differently.

Same-year losses

Losses that arise in the same tax year as your gains offset those gains fully. There's no floor. If you have £10,000 of gains and £10,000 of losses, your net gain is zero. You don't pay CGT.

Carried-forward losses

Losses that weren't used in the year they arose carry forward indefinitely. But there's a crucial constraint: carried-forward losses can only reduce your net gains down to the annual exempt amount, currently £3,000 for 2024/25, 2025/26 and 2026/27 (frozen). They cannot reduce it below that.

This is deliberate. HMRC doesn't want you wasting your annual exempt amount when you have old losses available. The exempt amount should absorb the first £3,000 of net gains; carried-forward losses only kick in above that.

Negligible value claims: losses without selling

What if your token went to zero? A rug pull, a dead protocol, a collapsed stablecoin. The token still sits in your wallet, technically, but it's worthless. You can't sell it: there's no liquidity, no buyer, no market.

HMRC allows you to make a negligible value claim. This lets you treat the asset as if you disposed of it at its current (negligible) value, crystallising the loss without an actual sale.

One limit that catches people out: a negligible value claim applies to your whole Section 104 pool for that token, not a hand-picked slice of it. Under HMRC's CRYPTO22500, the entire pooled holding is treated as disposed of and immediately reacquired at the negligible value, so the loss crystallises across every unit of that asset you hold. You can't claim on part of a holding while keeping the rest at its original cost. For a step-by-step walkthrough, see our full guide to negligible value claims.

The claim can be backdated, but not without limit. Under TCGA 1992 s24(2), you can elect for the deemed disposal to have happened on a date up to two tax years before the start of the tax year in which you make the claim, and only if the token was already of negligible value on that earlier date. You can't simply place the loss in whichever year suits you best. Within those limits, choosing an earlier year can still be useful for offsetting gains.

The Bed & Breakfast trap: selling and rebuying within 30 days

This is where people accidentally destroy their losses. The 30-day Bed & Breakfast rule states: if you dispose of a token at a loss and reacquire the same token within 30 days, the loss is not crystallised against your Section 104 pool. Instead, the disposal is matched against the reacquisition. For how this feeds through to your live return, see the 2025/26 Self Assessment filing guide.

The practical lesson: if you're selling to crystallise a loss, wait 31 days before rebuying the same token. Buy a different token, or simply stay in fiat. The 30-day window is calculated on a calendar-day basis.

At the tax-year boundary the trap is sharper. A loss-harvesting sell in late March matched against a rebuy in early April puts the disposal in the old tax year but pegs its cost basis to the new April acquisition. The intended loss often shrinks or vanishes, and the AEA you were trying to preserve goes unused. The year-end crypto tax planning guide works through the boundary case with numbers and the timing fix.

DeFi-specific loss scenarios

Losses in DeFi are more complex than "bought high, sold low." Here are the scenarios that trip people up.

Impermanent loss on LP withdrawal

You add 1 ETH and 2,000 USDC to a Uniswap pool. When you withdraw, you receive 0.8 ETH and 2,400 USDC, because the pool rebalanced. If the total GBP value of what you received is less than your cost basis (including gas), you have a capital loss. Each leg of the LP position needs to be priced separately at the time of withdrawal. Treating the whole withdrawal as one single-asset disposal gives the wrong result.

Failed protocols and stuck tokens

If you deposited tokens into a protocol that failed (your aTokens are worthless, your staked position is inaccessible) you may be able to make a negligible value claim. The token still exists in your wallet, but it's functionally worthless. Document the protocol failure and claim accordingly.

Bridged tokens on a dead chain

You bridged ETH to a Layer 2 that subsequently shut down. The bridged tokens are inaccessible. HMRC guidance on this specific scenario is thin, but the principle is the same: if the asset is irrecoverably lost, a negligible value claim is likely appropriate. Keep evidence of the chain's shutdown.

CGT rates: what your losses actually save you

The value of a loss depends on the CGT rate you would otherwise pay. For 2024/25 onwards (from 30 October 2024):

A higher-rate taxpayer with £10,000 of unreported losses is leaving £2,400 on the table. Every year they don't claim, the four-year reporting deadline creeps closer.

How to report crypto losses on your tax return

The mechanics are straightforward once you have the numbers:

1. Calculate every disposal with a UK crypto tax calculator. You need the proceeds (GBP value at disposal), cost basis (GBP value at acquisition, drawn from the S104 pool after same-day and B&B matching), and gas fees.
2. Complete SA108 boxes 13.1–13.8: Box 13.4 is your total gains, Box 13.5 is your total losses (as a positive number), and Box 13.6 is the net. If losses exceed gains, Box 13.6 shows the net loss.
3. Claim carry-forward: losses not used this year carry forward. Make sure they're declared on your return so HMRC has them on record.
4. Keep your working: HMRC expects you to be able to show how every gain and loss was calculated. That means the matching rule (same-day, B&B, or S104), the price source, and the pool state at the time of disposal.

For a full walkthrough of the Section 104 pool and HMRC's matching rules, see our complete 2024/25 crypto tax guide. To put the numbers on your current return (online deadline 31 January 2027) follow the 2025/26 Self Assessment filing guide. And if a token in your pool has gone to zero, our negligible value claim guide covers the s.24(2) election and the backdating window in detail.

How ChainTax handles losses

ChainTax computes capital gains and losses for every disposal using the full HMRC methodology: same-day matching, 30-day B&B rule, then Section 104 pooling. Gas fees are included as allowable costs automatically.

• Loss carry-forward is computed automatically across tax years, so losses that exceed gains in one year carry forward to the next, applied correctly against the annual exempt amount.
• B&B detection: if a disposal is matched against a reacquisition within 30 days, the matching rule is shown in the transaction detail so you can see exactly why your loss was adjusted.
• Multi-leg LP losses: both token legs of a liquidity position are priced separately, giving you the correct combined loss on withdrawal.
• Full working data: every disposal shows the matching rule, your cost before and after the sale, price source, and confidence level. This is your audit trail.

Want to see how a specific transaction was classified? Paste any Ethereum transaction hash into the free transaction explainer. No signup required.

If the loss came from a DeFi swap or LP withdrawal, read our DeFi swap tax guide and crypto matching rules explainer before assuming the full loss is available this year.