How Staking, Airdrops and Mining Crypto Are Taxed in the UK (2025/26)

If staking rewards or an airdrop have landed in your wallet and you're worried you owe tax on coins you never even sold, here's the honest answer: in most cases, yes, but probably less than you fear, and there's no double tax. Earning crypto is taxed differently from buying it. When you buy a coin with cash, nothing is taxed until you sell. But when crypto arrives as a reward, whether that's staking, mining, or many airdrops, HMRC usually treats the value you received as income on the day it landed, even if you never sold a thing. Then, separately, Capital Gains Tax (CGT) can apply later when you actually dispose of those coins.

The good news is there's no double-counting. The GBP value you were taxed on as income becomes the cost basis for the asset. So when you sell, you only pay CGT on the growth since you received it, not on the whole amount again. This guide walks through how staking, airdrops and mining each work, the one airdrop case that escapes Income Tax, and how to value everything correctly for your 2025/26 Self Assessment.

Figures here are for England, Wales and Northern Ireland for the 2025/26 tax year. Income Tax bands are different in Scotland, which we flag below. Always check your own facts against the HMRC sources at the end.

Are staking and mining rewards income or capital gains?

For most people, staking rewards and mining rewards are Income Tax, not CGT, at least at the point you receive them. HMRC's guidance is that the pound-sterling value at the time of receipt of any tokens awarded is taxable as miscellaneous income (with any reasonable expenses deducted). The same principle covers proof-of-stake staking rewards, validator rewards, and proof-of-work mining.

This income is added to your other taxable income and taxed at your marginal rate: 20% (basic), 40% (higher) or 45% (additional) in England, Wales and NI. Scotland has its own income tax bands and rates, so Scottish taxpayers should use the Scottish rates for this income (CGT, by contrast, is the same UK-wide).

There's one nuance worth knowing. If your staking or mining is run on a genuinely commercial, organised, large scale, HMRC may treat it as a trade rather than miscellaneous income. That changes how it's reported (trading profits, not 'other income'), but it's still Income Tax. For typical individuals staking a personal holding, miscellaneous income is the usual outcome.

Whatever the route, the value you're taxed on at receipt becomes the acquisition cost of those coins. They enter your Section 104 pool at that GBP value, ready for the CGT calculation when you eventually sell or swap. See how the Section 104 pool works.

Worked example

Staking reward: income now, CGT later

You stake ETH and receive 0.5 ETH as a reward when ETH is worth £2,000. A year later you sell that 0.5 ETH for £1,300 (ETH at £2,600). Here's both tax steps.

Step 1: Income Tax at receipt

GBP value of 0.5 ETH on day received£1,000

Taxed as miscellaneous income at your rate (e.g. 40%)£400 Income Tax

Step 2: CGT when you later sell

Sale proceeds£1,300

Cost basis (= value taxed as income)−£1,000

Capital gain£300

The £1,000 is not taxed twice. It's income at receipt, then it becomes the cost so only the further £300 of growth is a capital gain. That £300 goes towards your £3,000 annual exempt amount, so on its own it would likely be covered with no CGT to pay.

When is an airdrop taxable, and when isn't it?

Airdrops are the one area where the answer is genuinely 'it depends'. HMRC draws the line based on why you received the tokens:

Outside Income Tax, if you received the airdrop without doing anything in return (not for a service, not tied to any conditions) and it isn't part of a trade or business dealing in crypto. A token that simply appears in your wallet 'for nothing' falls here. You pay no Income Tax on receipt, but CGT can still apply when you later dispose of it.

Income Tax applies if the airdrop was in return for, or in expectation of, a service (for example, you did a task, promoted a project, or it rewards your activity), or it's a receipt of an existing trade. Then the GBP value on the day received is taxable income, exactly like a staking reward.

Because the boundary turns on the facts of each airdrop, this is an area to assess carefully. Many modern airdrops reward prior activity (using a protocol, completing 'quests'), which pushes them toward the taxable side. If a particular airdrop is genuinely unclear, treat that uncertainty honestly and consider professional advice rather than assuming the 'free' treatment.

Watch out

Even a tax-free airdrop is taxed when you sell it

An airdrop that escapes Income Tax is not tax-free forever. When you sell, swap or spend it, it's a CGT disposal. And here's the trap: if you paid no Income Tax on it, its cost basis can be £0 (you gave nothing for it and weren't taxed on its value), so the entire sale proceeds can be a chargeable gain. Don't assume 'free coin' means 'no tax', and keep a record of the date and value received either way.

Income now vs CGT later, at a glanceUK individuals, 2025/26. Income Tax at your marginal rate; Scotland uses Scottish income tax rates.

How you got the crypto	Income Tax on receipt?	CGT cost basis
Staking / validator rewards	Yes: GBP value on receipt	= that GBP value
Mining rewards	Yes: GBP value on receipt	= that GBP value
Airdrop for a service / activity	Yes: GBP value on receipt	= that GBP value
Airdrop for nothing in return	No	Often £0 (nothing given, not taxed)
Some DeFi lending / LP rewards	Often yes, but see below	Depends on treatment

What about DeFi lending and liquidity rewards?

DeFi is the area where you should be most careful. HMRC's view is that the return from lending or providing liquidity can be either income or capital, and it genuinely depends on how the transaction is structured. There's no single rule.

HMRC points to factors such as: whether the return is known and agreed up front (like 5% interest, which points toward income) versus speculative and uncertain (points toward capital); whether it's paid periodically (income-like) or as a one-off at the end; and whether you receive it as a separate payment or through the disposal of a capital asset.

Because of this, we don't state a single hard rule for DeFi rewards. If your only crypto income is plain staking or a clear service airdrop, the income-on-receipt approach above applies cleanly. But for lending, liquidity provision, or yield-farming returns, the income-vs-capital call is fact-specific, and on top of that, depositing into and withdrawing from some DeFi protocols can itself be a disposal. This is the part of crypto tax most worth getting professional advice on if amounts are material.

How do I report this, and by when?

Reward income (staking, mining, taxable airdrops) goes on the main Self Assessment return, typically as 'other taxable income' (miscellaneous income), or as self-employment if it's a trade. It is not part of the Capital Gains pages.

The later disposals (selling, swapping, spending, or gifting to anyone other than a spouse/civil partner) go on the SA108 Capital Gains Summary, which now has a dedicated cryptoassets section. You must report capital gains if your total gains exceed £3,000 (the 2025/26 annual exempt amount) or your total disposal proceeds exceed £50,000 in the year. CGT on crypto is 18% within your unused basic-rate band and 24% above it. See the crypto CGT rates guide and the SA108 box-by-box walkthrough.

Keep a clear record for every reward: the date received, the GBP value on that date, and the type (staking / mining / airdrop). That value is doing double duty. It's your income figure now and your cost basis later, so getting it right once saves you from over- or under-paying twice.

For the 2025/26 year, register for Self Assessment by 5 October 2026 if you're not already registered, and file and pay online by 31 January 2027. With the UK rolling out the Crypto-Asset Reporting Framework (UK firms collecting user and transaction data from 1 January 2026, first reports to HMRC by 31 May 2027) and HMRC already sending 'nudge' letters, the safe assumption is that HMRC can see your activity, so report it accurately. You can pull your rewards and disposals together with our free calculator and read how it computes everything. If you want the wider picture of how these rules fit together, see the complete UK crypto tax guide.

Sources

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This guide is information, not tax advice.Figures and thresholds are for the tax year shown (England, Wales & Northern Ireland; Scottish income tax bands differ). Rates and rules can change, and your own position may differ — check your circumstances and speak to an accountant before you file. CryptoCGT is an information tool, not a regulated tax adviser.