Gas Fees: Why a £20 Transaction Can Cost You Another £20 to Send
What you're actually paying for every time a wallet asks you to approve a gas fee, and how to stop overpaying for the exact same transaction.
By Firoz Khan|8 September 2026|Updated 1 October 2026|4 min read
A gas fee isn't a platform charging you for the privilege of using it, it's a payment to the network itself for the computing resources required to process your transaction. That distinction matters, because it means the fee genuinely varies with demand rather than sitting at a fixed rate someone could simply choose to lower.
What gas actually pays for
Every transaction on a network like Ethereum requires validators to do real computational work, checking it, executing it, and permanently recording it. Gas is the price of that work, paid in the network's native coin. Since the London upgrade the fee has two parts. The base fee is set by the protocol and burned, meaning it is removed from circulation, and only the priority fee, a tip you add, goes to the validators securing the chain. None of it goes to an exchange or wallet provider sitting in between you and the network.
Why it spikes
Block space is limited, and when more people want to transact than there's room for in the next block, a fee auction effectively kicks in: transactions offering a higher fee get prioritised, and everyone else pays more just to compete for the same limited space. A busy NFT mint or a volatile trading session can push fees several times higher than an ordinary quiet day within minutes.
The base fee moves with demand. It is set by an algorithm, not by individual users, and rises when blocks are full and falls when they are not. Your tip then decides how attractive your transaction is to a validator when space is tight.
Reading a gas fee before you confirm
A fee has two components worth understanding: the gas limit, roughly how much computational work the transaction needs, and the gas price, what you're offering to pay per unit of that work, usually shown in gwei. Most modern wallets translate this into an estimated fee in your own currency before you confirm, and it's worth actually reading that number rather than clicking through it.
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A worked example
The total fee is units of gas used multiplied by the base fee plus the priority fee. Say a swap uses 150,000 units of gas, the base fee is 30 gwei and you tip 1.5 gwei. That is 150,000 × 31.5 gwei, or 4,725,000 gwei, which is 0.004725 ETH. If ETH were worth £2,000, the fee would be £9.45. If demand pushed the base fee to 60 gwei, the same swap would cost 150,000 × 61.5 gwei, or 0.009225 ETH, which is £18.45. The gas, fees and price are illustrative figures, not a live quote.
How to actually pay less
Timing matters: network activity tends to dip during quieter hours, and fees dip with it. Using a layer-2 network, built specifically to process transactions cheaply before settling back to the main chain, can cut typical costs dramatically compared to transacting directly on a congested main network. Batching several actions into one transaction where a platform allows it also avoids paying the fixed overhead of gas multiple times over.
Ethereum.org's live figures in September 2026 put the average transaction cost at about $0.12 on the Ethereum main network and about $0.0015 across layer-2 networks. Those averages move with demand, but the gap is large. Layer-2 networks are separate chains, so moving funds onto one has its own steps and costs. The FCA's warning applies here as it does everywhere in crypto: it says crypto is largely unregulated in the UK and that you should be prepared to lose all the money you put in.
Tax and gas fees
HMRC's list of allowable costs for Capital Gains Tax includes transaction fees for inclusion on the distributed ledger, so a gas fee paid as part of buying or disposing of a token can generally be deducted when working out the gain on it. HMRC's guidance does not specifically address fees paid in crypto itself. Because using crypto to pay for goods or services is a disposal, paying gas in ETH is likely to be a small disposal of that ETH as well. Keep a record of the amount, the date and its value in pounds.
The mistake that costs people the most
Confirming a transaction during a period of high congestion without checking the fee first is the single most common way people end up paying more in gas than the trade itself is worth. If a wallet flags an unusually high estimated fee, that's worth treating as a genuine signal to wait rather than a formality to click past.
A reminder
The FCA risk warning still applies to higher-risk crypto content. Always assess how much risk you are willing to take before buying.
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