Guides · Last reviewed 31 October 2026

Crypto tax glossary

Plain-English meanings of the terms used in our guides and by HMRC, in alphabetical order. General information, not tax advice.

Airdrop

Tokens you receive for free, often for using or promoting a project. Whether they are taxed when you receive them depends on whether you did something in return.

Beneficial ownership

Being the real owner of tokens, even when they sit on an exchange or in a different wallet. Moving tokens you still own is not a sale.

Bridge

A way of moving tokens from one blockchain to another. Tax software often records it as a sale and a new purchase; HMRC says whether it is a disposal depends on the facts.

CARF (Cryptoasset Reporting Framework)

International rules that make crypto platforms report their users' transactions to tax authorities. UK platforms began collecting data on 1 January 2026, with the first reports due to HMRC by 31 May 2027.

Certificate of tax position

A form included with some HMRC letters, asking you to confirm your tax affairs are correct. Professional bodies advise getting advice before signing it.

Cost basis

What your tokens cost you, including allowable fees. Your gain is what you got for the tokens minus their cost basis.

DeFi swap

Exchanging one token for another on a decentralised exchange, such as Jupiter or Uniswap. For UK tax, swapping one token for another counts as a disposal.

Dynamic TAO (dTAO)

A change to the Bittensor network, launched in February 2025, that gave each subnet its own token (alpha). Staking TAO into a subnet now exchanges it for that subnet's alpha through a pool.

Disposal

Anything that ends your ownership of tokens: selling them, swapping them for other tokens, spending them, or giving them away (except to a spouse or civil partner). Each disposal can create a gain or a loss.

Futures and perpetuals

Contracts that track a token's price, often with borrowed money (leverage), without you owning the token. Their tax treatment can differ from buying and selling tokens.

Negligible value claim

Telling HMRC that tokens you still hold have become worthless. HMRC then treats them as sold and bought back at that value, so the fall becomes a loss you can claim. It covers your whole holding of that token.

Nudge letter

A letter from HMRC asking you to check your tax returns, often because exchange data suggests something may be missing. It is not a formal investigation, but it needs a reply.

Overpayment relief

A claim to get back tax you paid but didn't owe, up to 4 years after the end of the tax year concerned.

Reference code

The code we use for your records instead of your name, so your files never carry your identity.

SA108

The capital gains pages of the Self Assessment tax return, where gains, losses and disposals are reported.

Same-day rule

If you buy and sell the same token on the same day, those buys and sells are matched with each other first, before any other rule applies.

Section 104 pool

The running total of each type of token you hold and what it cost, giving an average cost. When you sell, the cost is usually worked out from this average, across all your wallets and exchanges.

Source of funds

Evidence of where money came from, which solicitors and lenders must check before a property purchase. For crypto, it means a clear trail from the money you put in to the money that reached your bank.

Staking

Locking up tokens to help run a blockchain in return for rewards. Rewards are usually taxed as income when you receive them, and the rise in their value is taxed as a gain when you sell.

Subnet token (alpha)

The token belonging to a single Bittensor subnet. Its price against TAO moves with supply and demand in that subnet's pool.

Tax-free allowance (annual exempt amount)

The amount of gains you can make in a tax year before Capital Gains Tax is due: £3,000 from the 2024-25 tax year.

Tax year

The UK tax year runs from 6 April to the following 5 April, so 2025-26 means 6 April 2025 to 5 April 2026.

30-day rule

If you sell tokens and buy the same type back within 30 days, the sale is matched with the buy-back instead of your average cost. It stops people selling at a loss and buying straight back just to create a tax loss.

Wrapped token

A token that represents another one in a different format, such as WETH for ETH. Software often records wrapping as a sale; the treatment can depend on the facts.