# Bitcoin explained for UK holders

Bitcoin (BTC) is a fungible cryptoasset. UK tax rules treat disposals as potentially liable to CGT. Buy through FCA-registered firms, keep records, and understand that FSCS does not protect your holdings.

## Key facts
- HMRC taxes bitcoin disposals under standard cryptoasset rules.
- Bitcoin is not legal tender in the UK — pounds sterling remain the official currency.
- The Bank of England does not issue or back bitcoin.
- Supply is capped at 21 million coins by the protocol.

## What bitcoin is

Bitcoin runs on a peer-to-peer network without a central issuer. Transactions are recorded on a public ledger (the blockchain) and secured by cryptography. Units are divisible to eight decimal places (satoshis).
## UK tax treatment

HMRC classifies bitcoin as an exchange token — a type of cryptoasset. Buying, selling, swapping or spending BTC can trigger CGT. Receiving BTC as payment for work triggers Income Tax and National Insurance in the usual way.
## Regulation and risk

Retail spot bitcoin trading is not fully regulated as an investment product, but AML registration and financial promotions rules apply to UK-facing firms. The FCA considers crypto high-risk; prices are volatile.

## FAQs
### Is bitcoin legal in the UK?

Yes. Holding and trading bitcoin is legal subject to tax and regulatory compliance.

## Sources

- [HMRC — Cryptoassets Manual](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual)
- [Bank of England — What are cryptoassets?](https://www.bankofengland.co.uk/knowledgebank/what-are-cryptocurrencies)

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— Digital Assets UK (https://digital-assets.co.uk/assets/bitcoin/), reviewed 2026-06-23. Source: https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual