How is DeFi lending and staking taxed in the UK?

Full answer

There is no single DeFi tax. HMRC treats each arrangement on its facts, and the key question is whether lending or staking your tokens counts as a disposal for Capital Gains Tax (CGT) and how the reward is taxed. If you transfer tokens to a lending protocol and give up beneficial ownership, that can be a disposal triggering CGT immediately, even though you expect the tokens back. If you retain beneficial ownership, there may be no disposal until you actually sell. Rewards (interest, staking yield, liquidity-pool returns) are normally taxable as income at the point you become entitled to them, valued in GBP at that time. Depending on the nature of the return, HMRC may treat it as miscellaneous income or as savings-type income; it is taxed at your marginal Income Tax rate. When you later sell or swap the reward tokens, any change in value between receipt and disposal is a separate CGT event. For 2026/27, CGT is 18% within the basic-rate band and 24% above it, after the GBP 3,000 annual exempt amount. Income Tax bands are 20%, 40% and 45%. Worked example: you receive staking rewards worth GBP 2,000 (GBP value on receipt) and you are a higher-rate taxpayer - you owe 40% Income Tax (GBP 800). If you later sell those tokens for GBP 2,500, the GBP 500 gain is a chargeable gain for CGT. Keep detailed records of every receipt, swap and disposal in GBP, because protocols rarely report to HMRC. This is a complex, evolving area - use the capital-gains-tax and income-tax calculators to estimate liability and check HMRC's Cryptoassets Manual, or take professional advice for large or unusual positions.

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