PolicyLens

Methodology note

Cut crypto CGT to 10%: calculation note

Assumptions behind the Cut crypto CGT to 10% scenario. Implementation detail is incomplete, so uncertainty is explicit.

View main policy page: Cut crypto CGT to 10%

Central fiscal result

+GBP 0.5bn - Net fiscal impact in 2027-28

Low case: -GBP 1.0bn. High case: +GBP 5.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Crypto capital gains are taxed at 10%.
  • A two-year sandbox and banking access rules are introduced.
  • Tax payments in crypto are operationally enabled.
  • Bitcoin reserve size is unspecified and not central.

Affected population

  • Affected units are crypto investors, exchanges, banks and HMRC.
  • Reform says about 7m UK residents hold crypto.
  • High-income investors likely account for much taxable gain.
  • Tax administrators face valuation and compliance risks.

Gross impact

  • Central case assumes lower CGT loses more than compliance gains.
  • Low case assumes declarations and onshore activity increase receipts.
  • High case includes reserve losses or large tax-base erosion.
  • Sandbox administration is small.

Fiscal build-up, central case

  • Crypto CGT rate cut: +GBP 0.8bn
  • Higher declarations and activity: -GBP 0.3bn
  • Regulation and HMRC systems: +GBP 0.1bn
  • Bitcoin reserve central effect: -GBP 0.1bn

Central net impact: +GBP 0.5bn in 2027-28.

Behaviour and pass-through

  • Low case assumes lower rates bring gains onshore and improve compliance.
  • Central case assumes modest compliance gain and some revenue loss.
  • High case assumes tax-base erosion and adverse reserve valuation.
  • Crypto volatility dominates short-run receipts.

Phasing

  • 2026-27: +GBP 0.2bn. Preparation or partial implementation.
  • 2027-28: +GBP 0.5bn. Main scenario year.
  • 2028-29: +GBP 0.8bn. Behaviour and pass-through develop.
  • 2029-30: +GBP 0.8bn. Steady-state uncertainty persists.

Main source groups

  • S1: Reform crypto bill defines 10% CGT, sandbox and reserve.
  • S2: HMRC CGT ready-reckoners show behavioural uncertainty.
  • S3: Crypto economics literature cautions about volatility and network effects.
  • S4: No official reserve size was specified.
  • S5: Consumer-protection costs are not fully known.
  • S6: Crypto-economics studies inform volatility, network and reserve-risk assumptions.