Token swaps can trigger UK tax if you miss the disposal
Swapping one token for another can feel like a harmless crypto move, but the taxman may see it very differently. Miss the disposal part and you could end up with a surprise CGT bill, even if no cash ever hit your bank account.
A crypto-to-crypto swap can create a UK tax bill even when no pounds ever leave the wallet. The disposal happens when one token is exchanged for another, and HMRC may still expect a gain, loss or income amount to be reported.
Do you owe UK tax the moment you swap bitcoin?
A crypto-to-crypto swap can be taxable in England even when you never touch fiat.
If you gave up one cryptoasset and received another, HMRC will often treat that as a disposal for Capital Gains Tax. The gain or loss comes from the sterling value at the exact trade time, less your allowable cost base and any relevant fees. If the tokens were received as a reward or service payment, Income Tax can sit alongside CGT.
Does no fiat mean no tax?
No. The absence of pounds does not make the event tax-free.
Think of it like trading a gold watch for a laptop. You did not get cash, but you still gave something up and got something else in return. HMRC treats many crypto swaps in the same way.
Which tax applies here?
Capital Gains Tax applies when you dispose of one asset and acquire another. Income Tax can apply when the asset you receive looks like earnings, not an investment switch.
A swap on a centralised exchange often points to CGT. A DeFi reward, referral token, yield token, or service-linked token can point to Income Tax as well. The label on the app does not control the tax result. The facts do.
Why HMRC treats some swaps as disposals
What looks like a simple swap can quietly turn into a tax event...
Those looking to go deeper will find token swaps can trigger uk tax a useful reference.
