Crypto Staking, DeFi and NFT Tax in the UK: HMRC Rules for 2026/27

The UK tax treatment of cryptocurrency has matured significantly since HMRC first published guidance in 2019. The current framework extends beyond simple "buy and sell" crypto to cover staking rewards, DeFi participation, liquidity pools, wrapped tokens, airdrops, and NFTs -- each with its own income or CGT treatment. As HMRC's Cryptoassets team expands its enforcement activities and data-sharing agreements with exchanges come into force, UK crypto investors face growing compliance obligations. Getting the basics right now -- and keeping meticulous records -- is essential.

Staking rewards: income when received

When you stake tokens in a proof-of-stake network and receive staking rewards, HMRC's current position (CRYPTO10200) is that the rewards are miscellaneous income at the point they are received. The taxable amount is the market value of the tokens in sterling at the time they arrive in your wallet.

Example: You stake 10 ETH and receive 0.5 ETH as rewards over the tax year. The average value of each ETH reward receipt over the year is £2,500. Taxable income = 0.5 ETH x £2,500 = £1,250 (included in your self-assessment as miscellaneous income).

Cost base for future disposal: The value at which the staking rewards were taxed as income becomes the base cost for CGT purposes when you later sell those tokens. If you received 0.5 ETH at £2,500 per ETH (income of £1,250) and later sell at £3,000 per ETH, the gain is 0.5 x (£3,000 - £2,500) = £250 -- subject to CGT.

Scale matters: If staking activity is large enough to constitute a trade (rare for individual investors), profits are taxed as trading income with a broader set of deductible expenses.

DeFi: lending, borrowing, and liquidity pools

Decentralised Finance (DeFi) has created novel tax situations that HMRC is still developing formal guidance on. The current position:

DeFi lending (supplying tokens to lending protocols):

• Interest received is income, taxed at marginal rates.
• The supply of tokens to the protocol may or may not be a CGT disposal depending on whether legal title is considered to transfer. HMRC's evolving guidance suggests it may be treated as a disposal in some structures.

Liquidity pools:

• Depositing tokens into an AMM liquidity pool (e.g., Uniswap v3) typically involves exchanging your tokens for LP tokens.
• HMRC treats this as a disposal of the deposited tokens and an acquisition of the LP tokens.
• CGT arises on the disposal at the market value of the LP tokens received (less the base cost of the deposited tokens).
• When you withdraw from the pool, there is another disposal of the LP tokens and acquisition of the returned tokens (which may differ in composition from what was deposited due to impermanent loss).

Wrapped tokens: a potential surprise disposal

Wrapping a token -- for example, converting ETH to WETH (Wrapped Ether) to interact with an ERC-20-compatible protocol -- may be treated as a disposal of ETH and an acquisition of WETH by HMRC. If ETH has appreciated since you acquired it, this creates a CGT event.

HMRC has not published definitive guidance specifically on wrapped tokens (as of 2026), but its general principle that exchanging one cryptoasset for another is a disposal suggests that wrapping is likely to be treated as a disposal. Some practitioners argue the economic substance is retention of the same asset in a different form -- but HMRC has not endorsed this position.

Airdrops: income or CGT event?

HMRC distinguishes between two types of airdrop:

Airdrop for providing a service: If you received an airdrop because you performed an action -- early adopter of a protocol, completing a task, referring users, holding a certain token at a snapshot date -- the tokens are income at their market value on receipt.

Unconditional airdrop: If tokens are distributed without any action required from the recipient (a pure marketing airdrop to all holders of a certain wallet), HMRC generally treats the tokens as received with a nil cost base. No income arises on receipt, but the full sale proceeds are subject to CGT when you dispose of them.

The practical distinction matters significantly: for a large airdrop received for doing something, income tax at 40-45% could apply immediately. For an unconditional airdrop, only CGT (18-24%) applies on eventual sale.

NFT sales: CGT in most cases

Non-fungible tokens (NFTs) are treated as cryptoassets by HMRC. The default tax treatment on disposal:

CGT applies in most cases. The gain is the disposal proceeds minus the cost base (what you paid to acquire the NFT plus any associated transaction fees). CGT rates are 18% (basic rate taxpayer) or 24% (higher/additional rate) from October 2024. The £3,000 annual CGT exempt amount applies.

Income tax instead if you create and sell NFTs as part of a trading activity. A digital artist who creates NFTs and sells them in the course of their professional practice is treated as self-employed -- the receipts are trading income, not capital.

The distinction between trading and investing in NFTs uses the same "badges of trade" analysis as other assets -- frequency of transactions, profit motive, commercial nature, and nature of the asset.

Record-keeping: the HMRC Section 104 pool

HMRC requires UK crypto investors to calculate gains using the Section 104 pooling rules (the same rules used for shares). Under pooling:

• All tokens of the same type (e.g., all BTC) are pooled together.
• The pool has a total cost base and a total quantity.
• When you sell some tokens, the cost base is calculated proportionally.

Additionally, two anti-avoidance rules apply:

• Same-day rule: If you buy and sell the same cryptoasset on the same day, the buy and sell are matched (not pooled).
• 30-day rule (bed and breakfasting): If you sell and rebuy the same cryptoasset within 30 days, the sale is matched to the rebuy rather than the pool.

Crypto tax software such as Koinly, Divly, CoinTracker, or TaxBit can automate these calculations across thousands of transactions. HMRC also accepts manually prepared workings provided the methodology is consistent and defensible.

HMRC enforcement and data-sharing

HMRC's Cryptoassets team was established specifically to address non-compliance in the crypto sector. HMRC has used its information powers to obtain data from UK-regulated exchanges. Any exchange operating in the UK must be FCA-registered and is subject to HMRC information requests.

From 2027, the OECD's Crypto-Asset Reporting Framework (CARF) will require crypto exchanges worldwide to report customer information to their home tax authorities, which will share it internationally. UK-resident investors using non-UK exchanges will have their activity reported to HMRC automatically. The window for voluntary disclosure before this data-sharing begins is narrowing.

HMRC also offers a voluntary disclosure service for crypto -- "Cryptoassets Disclosure Facility" -- where investors can come forward and settle historic undisclosed crypto gains with reduced penalties compared to what would arise if discovered through an HMRC-initiated investigation.