What is DeFi Staking?

Full Definition

DeFi staking means committing cryptoassets to a decentralised finance protocol or proof-of-stake blockchain, helping validate transactions in exchange for reward tokens. In the UK, HMRC generally treats staking rewards as miscellaneous income (or trading income if your activity amounts to a trade), taxed at your marginal Income Tax rate when received, based on the sterling value at that point. The trading allowance of GBP 1,000 may cover small amounts. When you later sell, swap or spend the tokens, Capital Gains Tax can apply on any gain above the Annual Exempt Amount of GBP 3,000, at 18% (within the basic-rate band) or 24% above it. Pooling rules and same-day and 30-day matching rules apply to crypto disposals. Record dates, values and counterparties carefully, because tax can arise both on receipt and on disposal. Rules are evolving, so check current HMRC cryptoassets guidance on gov.uk before filing.

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