CryptoTax UK · Guide
Yield Farming Tax UK — HMRC Guide for 2025/26
Yield farming rewards can accumulate quickly — but so can the tax complexity. This guide covers how HMRC may tax yield farming income and the disposal of reward tokens. Educational only — not tax advice.
Estimate my yield farming tax →Are yield farming rewards taxable?
Yield farming rewards received for providing liquidity or staking are likely to be treated as miscellaneous income in the year received. The GBP value of reward tokens at the time they are credited to your wallet is typically the taxable amount.
Auto-compounding vaults
Some yield farming strategies use auto-compounding vaults that reinvest rewards automatically. Each reinvestment may be treated as a receipt of income followed by an acquisition. Keep detailed records.
Disposal of reward tokens
When you sell or swap farming reward tokens, you realise a capital gain or loss based on the difference between the disposal proceeds and your original acquisition cost.
Frequently asked questions
Do I pay tax when I receive yield farming rewards?
Probably yes — in the year you receive them as income, at the GBP value on receipt. You may then also have a CGT event when you eventually sell or swap those tokens.
What records do I need for yield farming?
For each reward distribution: the date, the token and quantity received, and the GBP value on that date. For each disposal of reward tokens: the date, quantity, proceeds and cost basis.
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Estimate my yield farming 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.