Staking Tax UK: How HMRC Taxes Staking, Mining and Airdrops

Staking rewards are taxed as income in the UK. Unless your activity is organised enough to count as a trade, HMRC treats the pound sterling value of the tokens you receive as miscellaneous income on the day they arrive, taxable at your normal Income Tax rates after the £1,000 trading and miscellaneous income allowance. The same rule covers mining, lending interest and airdrops you did something to earn. Those tokens then enter your Capital Gains Tax pool at that value, so when you later sell or swap them you only pay Capital Gains Tax on the growth since you received them. This guide explains each type of reward for 2025/26 — the return due 31 January 2027 — with worked examples.

Is crypto staking taxable in the UK?

Yes. HMRC's Cryptoassets Manual (CRYPTO21200) says that where staking does not amount to a trade, "the pound sterling value (at the time of receipt) of any tokens awarded will be taxable as income (miscellaneous income) with any appropriate expenses reducing the amount chargeable". If you keep the tokens, you "may have to pay Capital Gains Tax when they later dispose of them".

GOV.UK's guidance on receiving cryptoassets puts it plainly: tokens you receive from "activities such as mining, staking or lending count as income", including income earned from DeFi. Whether staking is a trade depends on the degree of activity, organisation, risk and commerciality — for almost everyone staking through an exchange or a validator, it is not, and the miscellaneous income treatment applies.

How are staking rewards valued and taxed?

Each reward is valued in pounds on the day you receive it, and the total for the tax year is added to your other income. It is taxed at your marginal Income Tax rate: 20%, 40% or 45% in England, Wales and Northern Ireland, or the Scottish rates if you are a Scottish taxpayer. The £1,000 trading allowance can be set against it (see below).

Worked example. On 15 September 2025 you receive 1 ETH as a staking reward when ETH is worth £2,000. You have £2,000 of miscellaneous income for 2025/26. If that is your only miscellaneous income, the first £1,000 is covered by the trading allowance and the remaining £1,000 is taxed at your marginal rate — £200 for a basic rate taxpayer, £400 at the higher rate.

Your ETH pool also gains 1 ETH with an allowable cost of £2,000. Nothing more happens for Capital Gains Tax until you dispose of it.

Small, frequent rewards — daily or per-epoch payouts — each need a sterling value on their own date. This is tedious by hand, which is why exchange exports and price data matter: our calculator values each reward on its UK date using a consistent daily price and adds them up for you.

What happens when you sell staked tokens?

You pay Capital Gains Tax on the difference between what you get and the value you were taxed on when you received them. GOV.UK confirms that if you have paid Income Tax on any part of a token's value, "you will not pay Capital Gains Tax on that amount" — only on any gain after receiving it.

Continuing the example. In March 2026 you sell the 1 ETH for £2,600. Your proceeds are £2,600 and the allowable cost is £2,000 (the value you were taxed on), giving a gain of £600. That gain is added to your other gains for 2025/26 and set against the £3,000 annual exempt amount. If ETH had fallen to £1,500 instead, you would have a £500 loss to claim — even though you had already paid Income Tax on £2,000.

Because the tokens join your pool, the normal same-day, 30-day and pooling rules decide what cost is used when you sell — see the section 104 pool guide.

What is the £1,000 trading allowance and how does it apply?

The trading allowance exempts up to £1,000 a year of trading and miscellaneous income. GOV.UK's guidance on receiving cryptoassets says: "You can get up to £1,000 allowance each tax year for trading and miscellaneous income. The income you earn from your cryptoassets will count towards this allowance." It covers all such income together — staking, casual self-employment, hiring out equipment — not £1,000 per source.

The reporting thresholds follow from it. GOV.UK says you must tell HMRC if your total miscellaneous income from all sources is between £1,000 and £2,500 (contact HMRC) or over £2,500 (register for Self Assessment). If you already file a return, you include the income in it. Using the allowance means you cannot also deduct actual expenses against that income; if your expenses exceed £1,000, claiming expenses instead may be better.

How is crypto mining taxed?

The same way as staking. HMRC's manual (CRYPTO21150) applies the identical test: if mining does not amount to a trade, the sterling value of mined tokens on receipt is miscellaneous income, less appropriate expenses. If it does amount to a trade — which depends on the degree of activity, organisation, risk and commerciality — the tokens are trading receipts and Income Tax rules take priority, with trading profits potentially also subject to National Insurance.

One point is specific to mining. The costs of mining equipment and electricity are not allowable when you later calculate Capital Gains Tax on selling the coins, because HMRC says they are not incurred "wholly and exclusively" to acquire the tokens (CRYPTO22150). They may be deductible against the mining income itself, but not against the later gain.

How are airdrops taxed?

It depends on whether you did anything for them. HMRC's manual (CRYPTO21250) says Income Tax may not apply to airdrops received in a personal capacity "without doing anything in return" and not as part of a trade. Airdrops "provided in return for, or in expectation of, a service" are taxable as miscellaneous income or trading receipts.

Whichever applies, the tokens enter a Capital Gains Tax pool. HMRC's CRYPTO22350 says airdropped tokens go into their own section 104 pool, or into your existing pool if you already hold that token, and a later disposal can produce a chargeable gain "even if it's not chargeable to Income Tax when it's received". For an airdrop that was not income, HMRC's guidance does not spell out the acquisition cost; the usual approach is to treat it as acquired at market value on receipt, and any calculator should flag airdrops for you to review rather than assume.

What about lending interest and DeFi rewards?

Interest-like returns from lending your crypto — whether to a centralised platform or through a DeFi protocol — are income when you receive them, in the same way as staking. GOV.UK's guidance on receiving cryptoassets says lending rewards count as income and specifically includes DeFi.

The complication with DeFi is what happens to the capital you lend or deposit. HMRC's current guidance (CRYPTO61130 and the surrounding DeFi chapter) says that depending on the platform's terms, transferring tokens into a lending arrangement or liquidity pool may itself be a disposal for Capital Gains Tax, and receiving them back an acquisition, because you give up beneficial ownership. That can create gains or losses when nothing has really changed economically.

The government has accepted this is disproportionate. A draft measure announced on 13 July 2026 would treat qualifying cryptoasset lending and liquidity pool transactions as "no gain, no loss" from 6 April 2027, so that Capital Gains Tax is deferred until an economic disposal. It does not apply to 2025/26 or earlier years, so for the return due 31 January 2027 the existing guidance stands. Our calculator does not compute DeFi lending or liquidity pool positions: it detects them, flags them and excludes them from totals with a warning, because the right answer depends on each protocol's terms. For those, Koinly or a specialist adviser is the better route.

Do exchange "earn" and "rewards" products count as staking?

For tax purposes it does not matter what the exchange calls it. If you receive extra tokens for holding, locking or lending your crypto on an exchange, the sterling value on receipt is income under the same principles. Promotional rewards — sign-up bonuses, referral rewards, "learn and earn" tokens — are generally rewards for doing something and so are also income, with the tokens entering your pool at that value.

Do I need to report staking income to HMRC?

You must report if your total trading and miscellaneous income is over the thresholds above, or if you are already in Self Assessment. For 2025/26 the online return and any payment are due by 11:59pm on 31 January 2027; if you need to register for Self Assessment, do so by 5 October 2026. Keep records of each reward: the date, the quantity, the sterling value and where it came from. GOV.UK lists exactly these for tokens you receive.

If you have several years of unreported staking income, the current and previous year go on your return and older years can be disclosed through HMRC's Cryptoasset Disclosure Service — see our disclosure guide. If HMRC has written to you, the letter helper will tell you which years to look at and how to respond.

Sources

• Check if you need to pay tax when you receive cryptoassets — GOV.UK
• CRYPTO21200 — Staking — HMRC Cryptoassets Manual
• CRYPTO21150 — Mining transactions — HMRC Cryptoassets Manual
• CRYPTO21250 — Airdrops (Income Tax) — HMRC Cryptoassets Manual
• CRYPTO22350 — Airdrops (Capital Gains Tax) — HMRC Cryptoassets Manual
• CRYPTO20250 — What is trading — HMRC Cryptoassets Manual
• CRYPTO22150 — Allowable expenses — HMRC Cryptoassets Manual
• CRYPTO22100 — What is a disposal — HMRC Cryptoassets Manual
• CRYPTO61130 — Making a DeFi loan — HMRC Cryptoassets Manual
• Tax-free allowances on property and trading income — GOV.UK
• Income Tax rates and allowances for current and previous tax years — GOV.UK
• Tax treatment of cryptoasset loans and liquidity pools (draft measure) — GOV.UK
• Self Assessment tax returns: deadlines — GOV.UK