HMRC’s Cryptoassets Manual splits the question. One part asks whether activity is a trade. Another asks whether tokens received outside a trade are still miscellaneous income. A third, in the decentralised-finance pages, asks whether you gave beneficial ownership away. Those are different tests. A sentence that says “staking is income” is too short to be safe.
Employment, first
If an employer pays you in tokens, that is earnings. Income tax and National Insurance are payroll questions, not a private capital gain. The sterling value that is taxed as earnings is the starting cost if you later dispose of those tokens. Keep the payslip, the date, the quantity and the sterling figure together.
Consensus staking and mining
The manual’s staking page (CRYPTO21200) says that whether staking amounts to a trade depends on the degree of activity, organisation, risk and commerciality. If it is not a trade, the sterling value of tokens awarded, at the time of receipt, is taxable as miscellaneous income, with appropriate expenses reducing the amount. If you keep the tokens, Capital Gains Tax can apply when you later dispose of them.
The same shape appears for mining that is not itself a trade. A hobbyist who receives a modest reward is in a different place from a person running a commercial operation with staff, premises and a profit-seeking system. The label in the app (“staking” or “rewards”) does not decide it. The facts do.
There is a £1,000 trading allowance that can be relevant to some small receipts. Whether it covers a particular staking or mining receipt is a facts-and-rules question, not an automatic nil. These notes do not treat every reward under £1,000 as invisible.
Airdrops
CRYPTO21250 describes an airdrop as an allocation of tokens, sometimes for holding other tokens, sometimes for registering, sometimes as marketing. Income Tax does not always apply. It may not apply where you receive the tokens without doing anything in return and not as part of a trade or a crypto business. It can apply where the airdrop is in return for, or in expectation of, a service. That income is either miscellaneous income or a trading receipt.
Even where the receipt is not income, disposing of the airdropped token can still produce a chargeable gain. If you paid nothing, the acquisition cost may be nil, which means the later proceeds are broadly the gain. Where a value has already been taxed as income, that value is the cost. Where a change in value is brought into a trading computation, Income Tax takes priority over Capital Gains Tax.
DeFi lending is a different chapter
The decentralised-finance pages, including CRYPTO61620, look at whether a lender or liquidity provider transfers beneficial ownership of the tokens. If the other party can deal with them as their own, the transfer can be a disposal at that moment, even though you expect tokens back later. The consideration might be a right to a future quantity, and that right can be ascertainable or not. If you only receive a new token in exchange, it can be an ordinary swap: proceeds equal to the sterling market value of the token received.
If the recipient is restricted from dealing with the tokens, that points the other way: beneficial ownership may not have passed, and there may be no disposal on the way in. Reward tokens paid on top of that arrangement can still be income. Reading the smart-contract marketing page is not a substitute for reading the terms that decide control.
This is the part of the subject where a general blog is most likely to oversimplify. If a material amount went into a liquidity pool or a lending protocol, the right next step is the manual’s DeFi chapter or a qualified adviser with the transaction history, not a one-line rule from a social post.
Forks
A chain split can leave you holding a new token you did not buy. HMRC has separate pages for that acquisition. Where nothing was paid, readers often find the new token has a nil acquisition cost, so a later sale is largely gain, while the original token keeps its own pool. The precise split depends on the fork. Check the current manual page rather than copying a forum formula.
What to write down on the day
- The date and time the tokens arrived, and the wallet or platform.
- The quantity and the token name, including whether it is a new asset or more of an existing one.
- The sterling value you are using, and the source of that price.
- Whether you did anything for the receipt: a service, a signup, a trade, or nothing.
- Any fee taken in tokens or in sterling.
That note is what lets the later Capital Gains Tax computation start from the right cost. Without it, the pool is a guess, and a guess repeated over a year becomes a number that looks precise and is not.
Primary source: HMRC Cryptoassets Manual, in particular the income pages on staking and airdrops and the decentralised-finance chapter.
