Key takeaways
- Staking and mining rewards are taxable when you receive them, at the pound sterling value of the tokens at the time of receipt, whether or not you sell.
- HMRC decides between a trade and miscellaneous income on degree of activity, organisation, risk and commerciality, and expects a trade only in exceptional circumstances.
- The trading and miscellaneous income allowance covers the first £1,000; above £2,500 of other income you must register for Self Assessment.
- Mining equipment and electricity cannot be deducted from a capital gain, though some costs may be deductible against income.
- When you later sell tokens you were taxed on as income, only the increase in value since you received them is a chargeable gain.
Staking and mining rewards are taxable when you receive them, not when you cash out. HMRC's Cryptoassets Manual says that where the activity does not amount to a trade, the pound sterling value of the tokens at the time of receipt is taxable as miscellaneous income, with any appropriate expenses reducing the amount chargeable. Selling those tokens later is a separate Capital Gains Tax event, and rewards received in the 2025/26 tax year belong on the return due by 31 January 2027.
When staking and mining rewards become taxable
HMRC treats staking and mining the same way. The manual page on mining transactions (CRYPTO21150) and the page on staking (CRYPTO21200) use the same wording: if the activity does not amount to a trade, the pound sterling value at the time of receipt of any tokens awarded is taxable as miscellaneous income, with any appropriate expenses reducing the amount chargeable. GOV.UK puts it plainly: tokens you receive from mining, staking or lending, including from DeFi, count as income.
Two things follow from that, and both catch people out:
- The taxable event is each reward, not the sale. If you never sell a single token, you can still have Income Tax to pay on everything credited to you during the tax year.
- The value is fixed on the day it lands. A reward worth £400 when it arrived stays a £400 income figure even if the token has since fallen to £40. The fall is a capital loss question, not an income question.
Most tokens do not trade against sterling, so you have to convert. HMRC's valuation page (CRYPTO23000) says an appropriate exchange rate must be established, with reasonable care and a consistent methodology, and that details of the methodology should be kept. In practice, record the date, the number of tokens, the rate you used and where you got it, for every reward.
Trade or miscellaneous income, and what decides it
This is the first fork in the road, because Income Tax rules take priority over Capital Gains Tax rules where there is a trade. HMRC says in both the mining and staking pages that whether the activity amounts to a taxable trade, with the tokens as trade receipts, depends on a range of factors such as:
- degree of activity
- organisation
- risk
- commerciality
Those four words are HMRC's, and it gives no scoring system behind them. The what is trading page (CRYPTO20250) adds the important context: only in exceptional circumstances would HMRC expect an individual's cryptoasset activity to amount to a financial trade, calling the question ultimately one of fact, and noting that calling something a trade is not sufficient to make it one for tax purposes. The approach is drawn from existing case law on trading in shares and securities.
Somebody staking a holding through an exchange button is almost certainly not trading. A person running validator hardware as a business, with capital at risk and a commercial plan, might be. If you are between the two, that is a conversation to have before you file, not after.
Losses follow the same split. HMRC's Income Tax losses page (CRYPTO21300) says a trader may be able to offset losses against future profits or other income, subject to restrictions, while losses taxed as miscellaneous income may be able to be carried forward only. Capital losses work differently again, and we cover those in our guide to crypto losses.
The £1,000 allowance and when you must register
There is a £1,000 trading and miscellaneous income allowance each tax year, and GOV.UK confirms that crypto income counts towards it. The thresholds that matter are these:
| Total miscellaneous income from all sources | What you need to do |
|---|---|
| £1,000 or less | Covered by the allowance. Keep your records. |
| Between £1,000 and £2,500 | Contact HMRC. |
| Over £2,500 | Register for Self Assessment. |
Source: GOV.UK guidance on receiving cryptoassets. Note that the test is your total from all sources, not per platform or per token, so small amounts from several places add up. If you use the allowance you cannot also deduct expenses against that income, because the allowance replaces them (GOV.UK tax-free allowances).
For 2025/26, new filers should have told HMRC by 5 October 2026, and the online return and the tax are due by 31 January 2027 (GOV.UK deadlines). Our guide to the next Self Assessment deadline has the full list.
National Insurance if the activity is a trade
HMRC's overview of which taxes apply (CRYPTO20050) says individuals are liable to Income Tax and National Insurance contributions on cryptoassets received from mining, transaction confirmation or airdrops. The self-employed classes are the ones to look at where the activity amounts to a trade. For 2025/26 those are:
| Class | 2025/26 position |
|---|---|
| Class 4 | 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270 |
| Class 2 | Treated as paid where profits are £6,845 or more, so nothing to pay; voluntary at £3.50 a week below that |
Source: HMRC rates and allowances for National Insurance and GOV.UK self-employed National Insurance rates. The Income Tax on top is charged at the usual 20%, 40% and 45% bands (GOV.UK Income Tax rates). Where the rewards are miscellaneous income rather than trading profits, the self-employed classes are not in point in the same way, and it is worth confirming your own position rather than assuming either way.
Selling tokens you have already paid Income Tax on
Both manual pages end with the same sentence: if the individual keeps the awarded assets, they may have to pay Capital Gains Tax when they later dispose of them. GOV.UK spells out how the two taxes fit together, saying that if you sell a cryptoasset you have paid Income Tax on, you calculate Capital Gains Tax as normal on any increase in the value of the tokens since you received them.
The mechanism is section 37 of the Taxation of Chargeable Gains Act 1992, cited on HMRC's what is a disposal page (CRYPTO22100): where Income Tax has been charged on the value of tokens received, the consideration is reduced by the amount already taxed, so the same value is not taxed twice. In effect the sterling value you declared as income becomes the cost that goes into your section 104 pool for that token, and only growth after that point is a gain.
Remember what counts as a disposal. Selling for money, swapping one token for another, spending tokens on goods or services and giving tokens away to anyone other than a spouse or civil partner are all disposals (CRYPTO22100). Auto-compounding a reward into a different token is therefore a disposal of the reward, on top of the income charge when it arrived.
For 2025/26 the Capital Gains Tax annual exempt amount is £3,000, and gains above it are taxed at 18% to the extent they fall within the basic rate band and 24% above it (GOV.UK Capital Gains Tax rates). Our Capital Gains Tax guide and the Capital Gains Tax calculator cover the calculation itself.
Mining costs: equipment, electricity and what you can deduct
Mining is the one area where HMRC gives a direct answer on costs, and it is not the one miners hope for. The allowable expenses page (CRYPTO22150) says costs for mining activities, for example equipment and electricity, do not count towards allowable costs in respect of the tokens, because they are not wholly and exclusively incurred to acquire the tokens. The same point appears in the public guidance on selling cryptoassets, which lists costs of mining activities like equipment or electricity among the costs you cannot deduct from a gain.
What HMRC does allow:
- It may be possible to deduct some of those costs against profits for Income Tax purposes (CRYPTO22150). For miscellaneous income, CRYPTO21150 allows appropriate expenses to reduce the amount chargeable.
- The cost of acquiring the equipment may be allowable when you dispose of the equipment itself, subject to provisions such as the chattels exemption and the wasting assets exemption.
- Where the mining amounts to a trade, the tokens initially form part of trading stock, and if they are transferred out of trading stock the business is treated as having bought them at the value used in the trading accounts, which is then the allowable cost on a later disposal.
If you run rigs at home you need a defensible basis for splitting household electricity between personal and mining use, and evidence for it. Meter readings, rig power draw and running hours are the usual starting points. Claiming the whole bill is not.
How this lands on your 2025/26 return
The 2025/26 return is the one due online by 31 January 2027. Where each piece goes:
| What you had | Where it goes on the return |
|---|---|
| Rewards taxed as miscellaneous income | The other income pages of the return, in pound sterling |
| Rewards from an activity that amounts to a trade | The self-employment pages, with Class 4 National Insurance calculated on the profit |
| Gains on disposing of tokens | The capital gains pages, which have had a cryptoasset section on returns from 2024/25 onwards |
That section is confirmed in HMRC's guidance on selling cryptoassets, which says returns should be completed in pound sterling in the cryptoasset section, available on returns for the tax year 2024 to 2025 onwards. For the mechanics, see how to report crypto on Self Assessment. If your rewards came from lending or a liquidity pool rather than from validating or mining, read our DeFi guide as well, because HMRC treats those arrangements differently again.
Keep your own records whatever route you take: HMRC's record keeping page (CRYPTO10400) puts the onus on you, not the exchange.
Get your staking and mining income reported
GoForma's ACCA and AAT qualified accountants file crypto Self Assessment returns for £298 plus VAT, which includes a Koinly licence for up to 25,000 transactions, your gains worked out across every exchange and wallet, and the full return filed. A standard one-off Self Assessment return is £198. We have filed more than 7,000 tax returns and are rated 4.9 on Google from 72 reviews. See our crypto tax accountants page, our crypto Self Assessment service, or book a free consultation.
