Earning cryptoassets through staking or mining creates a tax event under UK rules the moment you receive the reward -- separate from any later Capital Gains Tax that applies when you eventually sell or exchange those tokens. HMRC treats staking and mining rewards primarily as income, taxed on their value when received, which then becomes the acquisition cost for CGT purposes on later disposal. This guide explains how it works in 2026/27.
How Staking Rewards Are Taxed
HMRC generally treats staking rewards as miscellaneous income (or trading income, if the activity amounts to a trade) at the point they are received, valued in pounds sterling based on the fair market value of the tokens at that time. This is taxed at your marginal Income Tax rate, alongside your other income for the year.
The tokens received then have an acquisition cost equal to the amount already brought into account as income -- so when you later sell or exchange them, Capital Gains Tax is calculated only on any further increase in value since you received them, not on the whole disposal value again.
Mining: Hobby vs Trade
Whether mining rewards are taxed as miscellaneous income or as trading income depends on the degree of organisation, effort and commerciality involved -- broadly the same badges of trade tests used to decide whether any activity amounts to a business:
Hobby-level mining: occasional, small-scale mining with limited equipment and effort is generally taxed as miscellaneous income when the rewards are received.
Trade-level mining: significant, organised mining activity -- substantial equipment, ongoing commercial effort, and a clear profit motive -- can amount to a trade, taxed as trading income (potentially also triggering registration requirements and, if run through a company, Corporation Tax rather than personal Income Tax).
Getting this classification right matters, since trading income allows different expense deductions (such as electricity and hardware costs against profits) but also brings Class 2/4 National Insurance considerations for the self-employed and different reporting obligations.
Capital Gains Tax When You Later Sell
When you eventually sell, swap, or spend cryptoassets originally received through staking or mining, Capital Gains Tax applies to any gain since they were received -- calculated as the disposal proceeds minus the acquisition cost (the value already taxed as income when received) and minus any allowable costs.
This gain is measured against your Capital Gains Tax annual exempt amount, which is £3,000 for 2026/27, with gains above that taxed at 18% (basic rate) or 24% (higher rate) for most assets including cryptoassets, following the same pooling rules (same-day and 30-day rules, then the Section 104 pool) used for shares.
Record-Keeping
Because each staking or mining reward is potentially both an income event and the starting point for a future CGT calculation, detailed records are essential:
The date and time each reward was received.
The type and quantity of cryptoasset received.
The GBP value at the time of receipt (used both for the income charge and as the CGT acquisition cost).
Details of any associated costs (such as mining hardware and electricity, if claiming trading expenses).
Records of all subsequent disposals, including dates, quantities and proceeds.
Given the volume of small transactions staking can generate, many holders use crypto tax software to track this automatically rather than recording each reward manually.
Frequently Asked Questions
Are staking rewards taxed when I receive them or only when I sell?
Both, at different points. The value of the reward is generally taxed as income (miscellaneous or trading income) at the time you receive it. Then, separately, when you later sell or exchange those tokens, Capital Gains Tax applies to any further increase in value since receipt.
How is the value of a staking reward worked out for tax purposes?
HMRC expects the reward to be valued in pounds sterling at its fair market value at the point you receive it (gain "dominion" over the tokens), using a reasonable, consistently applied method such as an exchange rate from a reputable source at that date and time.
Is crypto mining always taxed as a trade?
No, only if the activity has the characteristics of a trade -- significant organisation, effort, equipment and commercial intent. Casual, small-scale mining is more likely to be taxed as miscellaneous income rather than trading income, though the specific facts of each case determine the outcome.
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What is the acquisition cost of tokens received through staking?
It is the amount already brought into account as income when the tokens were received -- in other words, the GBP value used for the Income Tax charge becomes your cost basis for Capital Gains Tax purposes when you later dispose of those same tokens.
Do I pay tax if I never convert my crypto rewards back to pounds?
Yes, the Income Tax charge on receiving staking or mining rewards applies regardless of whether you later convert the tokens to GBP -- receiving the reward itself is the taxable event for income purposes, and holding the crypto rather than cashing out does not defer that initial income charge.
What is the Capital Gains Tax annual exempt amount for crypto in 2026/27?
The same general CGT annual exempt amount applies to cryptoassets as to other chargeable assets: £3,000 for 2026/27. Gains above this, after using the exemption, are taxed at 18% for basic-rate taxpayers or 24% for higher and additional-rate taxpayers.
Do I need to register as self-employed if my mining counts as a trade?
Yes, if your mining activity is assessed as amounting to a trade, you would generally need to register for Self Assessment as self-employed, report trading income and allowable expenses, and consider Class 2 and Class 4 National Insurance in the normal way that applies to any self-employed trading activity.
Can I deduct electricity costs from mining income?
If your mining is classified as trading income, reasonable, wholly and exclusively business-related costs -- such as a proportion of electricity used for mining and hardware costs (potentially via capital allowances) -- can typically be deducted in calculating your taxable trading profit. If your mining is only miscellaneous (hobby-level) income, deducting expenses is more restricted.
How should I keep records for staking and mining tax purposes?
Keep a detailed log of every reward received, including the date, type and quantity of cryptoasset, and its GBP value at the time, along with records of any costs and all subsequent disposals. Given the frequency of small staking rewards on many networks, crypto tax tracking software is commonly used to automate this rather than logging every transaction by hand.
Do I need to report staking or mining rewards if the amount is small?
There is no blanket small-amount exemption for staking or mining income -- in principle every reward is taxable when received. However, if your total miscellaneous income across the year (including small rewards) falls within your Personal Allowance and any trading/miscellaneous income allowance, you may have little or no extra tax to pay, though you should still keep records in case totals add up over the year.
Disclaimer: This guide reflects HMRC’s published approach to taxing cryptoasset staking and mining as it applies in 2026/27. Crypto tax guidance continues to evolve -- always check the current HMRC Cryptoassets Manual and keep detailed records. This guide is for general information only and is not professional advice. Consult a qualified adviser and refer to gov.uk for current official guidance before relying on any treatment.
