CryptoTax UK · Guide
When is crypto subject to Income Tax in the UK?
Most UK crypto investors focus on Capital Gains Tax — but some crypto activities are subject to Income Tax instead. The distinction matters because Income Tax rates (up to 45%) are typically higher than CGT rates (18–24%). This page explains when HMRC typically applies Income Tax to crypto. Educational only — not tax advice.
Estimate my total crypto tax →The core distinction: capital vs income
CGT applies to disposals of capital assets (selling, swapping, spending crypto). Income Tax applies when crypto is received as income — i.e. as a reward for a service, as employment pay, as a return from a trade, or as a regular yield. The same token may trigger both: Income Tax when received, then CGT when eventually disposed of.
Mining rewards
Crypto received from mining is typically subject to Income Tax at the GBP value on the date of receipt. If mining is conducted as a business or trade, it may be taxed as self-employment income (subject to Income Tax and National Insurance). Hobby miners with modest activity may be able to use the £1,000 trading allowance.
Staking rewards
HMRC's current position is that staking rewards are typically miscellaneous income subject to Income Tax on receipt. When you later sell the staked tokens, CGT may apply on any further price movement since receipt. See our dedicated staking guide for details.
Airdrops received for a service
If you received an airdrop in return for something — participating in governance, promoting a project, testing a protocol — it is likely Income Tax on receipt at GBP value. Unsolicited airdrops with no service requirement typically have nil cost and only trigger CGT on disposal.
Salary or contractor pay in crypto
If your employer pays your salary in crypto, the GBP value on the date of receipt is subject to Income Tax and National Insurance in the same way as cash salary. The receipt value becomes the cost basis for any future CGT calculation when you dispose of the tokens.
Frequently asked questions
Can I deduct expenses against crypto income?
If your mining or crypto activity constitutes a trade, ordinary business expenses (electricity, hardware, software) may be deductible against the trading income. For miscellaneous income, deductions are more limited — only expenses incurred wholly and exclusively for the purpose of earning that income may qualify.
Is DeFi lending interest subject to Income Tax?
Interest-like returns from lending crypto on DeFi protocols are typically treated as income and subject to Income Tax when received. Keep records of every receipt, including the GBP value on the date of receipt.
Where do I report crypto income on Self Assessment?
Miscellaneous crypto income (staking, mining as a hobby, unsolicited rewards) typically goes in the 'Any other income' section of your SA100. Trading income from crypto (mining as a business) goes in the Self-Employment pages. Employment income in crypto goes via PAYE.
What is the trading allowance and does it apply to crypto income?
The £1,000 trading allowance may apply to small amounts of miscellaneous self-employed income, including small-scale mining. If your total crypto income is under £1,000, you may not need to report it. Above £1,000, the full amount is typically taxable.
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Estimate my total crypto tax →Educational guidance only. CryptoTax UK is not a regulated tax adviser and the information above does not constitute tax, legal or financial advice. Always confirm your specific position with HMRC or a qualified accountant before filing.