Worthless, stolen or inaccessible crypto: UK loss claims
Quick answer: A price collapse, theft or lost private key does not automatically create an allowable capital loss. A negligible-value claim has conditions and needs evidence. Establish what asset you still own, why it has become of negligible value and the relevant date before claiming.
Distinguish realised crypto losses, lost private keys, theft and negligible value claims, with an evidence checklist for a UK tax review.
A disposal loss is different from a negligible-value claim
An actual disposal normally gives you proceeds and an asset quantity to match against allowable costs. A negligible-value claim is a different route under section 24 of the Taxation of Chargeable Gains Act 1992. A token being worth less than you paid is not enough: distinguish a substantial decline from negligible value.
Lost private keys do not remove ownership
HMRC explains that losing a private key does not itself dispose of the cryptoasset. It may be possible to make a negligible-value claim if the conditions are met. Document the loss of access, ownership evidence and recovery attempts. Never send a recovery phrase to someone claiming to certify a tax loss.
Sources: HMRC: losing private keys
Theft, fraud and failed exchanges
The theft of tokens is not automatically a disposal by the owner. Insolvency may leave a claim against an exchange or a right to a distribution, so identify exactly what remains recoverable. Save administrator notices and distribution records. Avoid applying a single “lost” label to a stolen token, an irrecoverable debt and an illiquid holding.
Sources: HMRC: theft and fraud
Evidence pack for a loss review
Give an adviser a timeline and the evidence supporting the asset’s value and ownership.
- Acquisition cost and pool calculation for the relevant token.
- Proof you owned the asset at the proposed claim date.
- Liquidity, delisting and redemption evidence.
- Details of recoveries, compensation or creditor rights.
- Copies of correspondence and a written explanation of the claim.
If value or access returns later
Keep the record of any accepted claim and resulting acquisition cost. A later recovery or sale may have consequences; do not reuse the original cost without checking. Loss claims have deadlines and can affect future years, so keep them separate from a casual portfolio write-off.
Frequently asked questions
Can I claim a loss just because a coin fell 99%? +
A price fall alone is not a disposal. Consider whether you actually disposed of the asset or whether a properly evidenced negligible-value claim meets the conditions.
Can a stolen token be treated as sold for zero? +
Not automatically. HMRC distinguishes theft from a disposal. The rights retained and the facts of the loss require separate assessment.