How HMRC Taxes DeFi Token Swaps (Uniswap, 1inch, Curve)

You swapped ETH for USDC on Uniswap. No fiat was involved. No bank account was touched. You might assume there's nothing to report.

That assumption will cost you. Every token-to-token swap is a disposal for Capital Gains Tax purposes. It doesn't matter that you never "cashed out." HMRC treats the moment you exchange one cryptoasset for another as a taxable event — the same as if you'd sold for pounds and immediately bought the new token.

This guide covers exactly how HMRC taxes DeFi swaps, what the gain calculation looks like, how aggregators and routing complicate things, and the mistakes that lead to incorrect tax bills.

Why every swap is a disposal

HMRC's position is clear: disposing of a cryptoasset includes "exchanging it for a different type of cryptoasset" (CRYPTO22100). When you swap ETH for USDC on a DEX, you've disposed of your ETH at its market value in GBP at the time of the transaction. The USDC you receive is a new acquisition, also valued at GBP market price on that date.

The gain or loss on each swap is calculated as:

Both sides of the swap then update your Section 104 pools. The token you disposed of has units removed from its pool. The token you received enters its own pool as a new acquisition at the GBP market value on that date. These pools track a weighted average cost basis across all your holdings of each token — HMRC doesn't use FIFO or LIFO. See our full guide to Section 104 pooling →

Scenario 1: a simple DEX swap

You bought 2 ETH in January 2024 for £3,400 total. In November 2024, you swap 1 ETH for 3,200 USDC on Uniswap V3 when ETH is worth £2,800. Gas costs £4.

This disposal happened after 30 October 2024, so it's taxed at the new CGT rates: 18% for basic rate taxpayers, 24% for higher rate. Your S104 pool for ETH now holds 1 ETH at £1,700. Your USDC pool gains 3,200 USDC at a cost basis of £2,800.

Scenario 2: aggregator swaps and routing

Aggregators like 1inch don't execute a single swap. They split your trade across multiple liquidity pools to get the best price. A single 1inch transaction might route your ETH through Uniswap V3, Balancer, and Curve — with intermediate hops through WETH, USDT, or other tokens along the way.

From a tax perspective, only the net flow matters. If you sent 1 ETH and received 3,200 USDC, that's one disposal of 1 ETH — regardless of how many pools it touched in between. The intermediate routing steps are not separate taxable events.

Similarly, WETH wrapping and unwrapping within a swap is not a separate taxable event. WETH is just a technical wrapper around ETH used by smart contracts. HMRC doesn't treat the wrap as a disposal, and neither does ChainTax.

ChainTax supports the major DEXes and aggregators where UK DeFi users trade: Uniswap V1, V2, and V3; 1inch across four contract versions (V2, V3, V5, V6); Curve; Balancer V1 and V2; Mooniswap (1inch's own AMM); and any other DEX via the generic swap heuristic, which catches SushiSwap and similar protocols. Try any transaction hash in the free transaction explainer to see the classification instantly.

Scenario 3: stablecoin-to-stablecoin swaps

Swapping USDC for DAI feels like moving between two versions of the same thing. They're both pegged to the dollar. Surely there's no gain?

Usually, you're right — the gain will be close to zero. But "close to zero" isn't the same as "not reportable." HMRC treats USDC and DAI as different cryptoassets. Exchanging one for the other is a disposal. If the GBP/USD exchange rate has moved since you acquired the USDC, or if you acquired it at a slight premium or discount, there will be a small gain or loss.

Scenario 4: failed transactions

Your swap failed — the transaction reverted, no tokens changed hands. Is the gas fee an allowable cost?

No. A failed transaction is not a disposal. Since there was no disposal, there's no gain to deduct costs from. The gas fee is simply a lost cost. You can't claim it against CGT, and you can't claim it as an expense unless you're trading as a business (which almost no individual investor is).

ChainTax detects failed transactions and classifies them correctly — they won't appear as disposals in your report, and the gas won't be incorrectly added to your allowable costs.

The 2024/25 split year and your swaps

The Autumn Budget on 30 October 2024 changed CGT rates mid-year:

If you were active on DEXes throughout the year, your swaps before and after 30 October are taxed at different rates. A swap on 28 October is taxed at 10%/20%. The same swap two days later is taxed at 18%/24%. Your self-assessment needs to split these correctly — this is reflected in SA108 Box 51, an adjustment box that accounts for the rate change.

The annual exempt amount for 2024/25 is £3,000. Only gains above this threshold are taxed. Losses from swaps that went against you can offset gains — but HMRC only lets you use losses to reduce your net gain down to the exempt amount, not below it.

Gas fees: the one cost you can always deduct

Every on-chain swap costs gas. HMRC treats gas fees paid on a disposal as an allowable cost, which directly reduces your taxable gain. On a £1,000 gain with £12 of gas, you're taxed on £988.

This matters more than people think. If you executed 50 swaps across the year and paid an average of £8 in gas per transaction, that's £400 of allowable costs — potentially saving you £72 to £96 in tax depending on your rate. ChainTax automatically prices gas in GBP at the time of each transaction and deducts it from the gain.

What generic tools get wrong

The most common errors we see from other crypto tax tools when handling DEX swaps:

• Counting aggregator routing hops as separate disposals. A single 1inch swap that routes through three pools is one disposal, not three. Tools that parse each Transfer event as an independent swap will triple-count your disposals and produce phantom gains.
• Treating WETH wraps as taxable. ETH → WETH is a technical wrapper used by smart contracts. It's not a disposal. Tools that classify every WETH wrap as a swap inflate your disposal count and create gains that don't exist.
• Missing gas as an allowable cost. Some tools don't price gas in GBP at the time of the transaction, or don't deduct it from the gain. Small per-transaction, but material across a year of DeFi activity.
• Applying a single CGT rate to 2024/25. The split-year rate change means every disposal needs per-transaction rate determination. A flat rate across the year is wrong by definition.
• No Section 104 pooling. Tools that use FIFO matching instead of HMRC's required same-day → B&B → S104 priority chain will produce different cost basis figures and different gains. The numbers might look plausible, but they won't match what HMRC expects.

What to do if you've been swapping all year

1. Accept that every swap is a disposal. There's no threshold below which swaps become non-reportable. If you swapped tokens, you have disposals.
2. Count your disposals, not your "cash-outs." The number of swaps you did — including token-to-token swaps that never touched fiat — is your number of reportable disposals for SA108 Box 13.1.
3. Check the dates. In 2024/25, the CGT rate depends on when each swap happened. Anything before 30 October is 10%/20%. Anything on or after 30 October is 18%/24%.
4. Don't forget losses. Swaps that resulted in a loss (you disposed of a token for less than your average cost basis) are valuable. They offset your gains. The £3,000 annual exempt is applied after loss offset.
5. Verify your tool handles aggregators correctly. If you used 1inch and your tax tool shows three disposals for a single swap transaction, something is wrong. Paste the transaction hash into our free explainer to see what ChainTax detects.