UK Crypto Staking Tax Guide 2025/26

What is Crypto Staking?

Crypto staking involves locking cryptocurrency to validate blockchain transactions in exchange for rewards. Common examples in the UK include:

• Ethereum (ETH): Solo staking or using services (Lido, Rocket Pool, Coinbase, Kraken)
• Cardano (ADA): Delegating to stake pools
• Polkadot (DOT): Nominating validators
• Solana (SOL): Validator delegation
• Exchange staking: Kraken, Coinbase, Binance

HMRC Treatment of Staking Rewards

HMRC treats staking rewards as income based on guidance in CRYPTO22200:

"Staking rewards received by individuals are likely to be subject to Income Tax and National Insurance contributions."

Key HMRC Guidance (CRYPTO22200)

HMRC's Cryptoassets Manual clarifies:

• Income when received: Staking rewards are taxable when you receive them, not when sold
• Fair market value: Value in GBP at time of receipt
• Income Tax + NI: Subject to Income Tax and potentially National Insurance
• Capital gains later: When you sell, CGT applies to any appreciation

Income Tax vs Capital Gains Tax

Staking involves two separate tax events:

1. Income Tax: When you receive rewards (income at FMV)
2. Capital Gains Tax: When you sell rewards (gain/loss on appreciation)

When Are Staking Rewards Taxable?

Staking rewards are taxable when you receive them and gain control:

Exchange Staking

If staking through Kraken, Coinbase, or Binance:

• Taxable date: When rewards appear in your account
• FMV: GBP value on that date
• Frequency: Daily, weekly, or per-epoch

Solo Staking (ETH Validator)

If running your own validator:

• Taxable date: When rewards credited to validator
• Tracking: Must track each reward (potentially thousands per year)
• Software recommended: Use crypto tax software for accuracy

Liquid Staking Tokens (stETH, rETH)

Lido and Rocket Pool have unique considerations:

• Lido (stETH): Daily rebases likely taxable as income
• Rocket Pool (rETH): Appreciation may not be income until redeemed
• HMRC uncertainty: No specific guidance yet

Conservative approach: Treat rebases as income. Consult a crypto tax advisor.

How to Calculate Staking Income

Step 1: Determine Fair Market Value in GBP

Fair market value = GBP price when received.

Example: Receive 0.05 ETH on 15 March 2025 when ETH = £2,400

• FMV = 0.05 × £2,400 = £120 income

Step 2: Track All Rewards

Step 3: Sum for Tax Year

UK tax year runs 6 April to 5 April. Total all rewards received during this period.

Income Tax on Staking Rewards

Tax Rates (2024/25)

Staking rewards are taxed at your marginal income tax rate:

Note: Scotland has different rates and bands.

National Insurance Contributions

Staking rewards may be subject to National Insurance depending on how you receive them:

• Casual staking: Likely no NI (treated as investment income)
• Staking business: Subject to Class 2 (£3.45/week) and Class 4 (9% on profits £12,570-£50,270, 2% above)

Most UK stakers are casual investors and don't pay NI on staking rewards.

Capital Gains Tax When You Sell

Section 104 Pooling

UK uses Section 104 pooling for identical crypto assets:

• All ETH you own goes into one "pool"
• Staking rewards add to the pool at their income value
• When you sell, cost basis = pooled average cost

Cost Basis = Income Value

Example:

• 15 March: Receive 0.05 ETH when ETH = £2,400
• Income = £120
• Added to Section 104 pool at £120 cost basis

CGT When You Sell

Example (continued):

• 1 June: Sell 0.05 ETH when ETH = £2,800
• Sale proceeds = £140
• Cost basis from pool = £120
• Capital gain = £140 - £120 = £20

CGT Rates (2024/25)

• Basic rate taxpayers: 10% on gains
• Higher/additional rate: 20% on gains
• Annual exemption: £3,000 (first £3,000 of gains tax-free)

Same-Day and 30-Day Rules

Special matching rules apply:

1. Same-day rule: Acquisitions and disposals on same day matched first
2. 30-day rule: Acquisitions within 30 days after disposal matched next
3. Section 104 pool: All other acquisitions use pooled cost

How to Report on Self Assessment

Income Tax Reporting

Report staking rewards as "Other taxable income":

1. Complete SA100 (main Self Assessment form)
2. Go to SA100 Page 3, Box 17 ("Other taxable income")
3. Enter total staking rewards in GBP
4. Keep detailed records as supporting evidence

Capital Gains Tax Reporting

When you sell staking rewards:

1. Calculate gains using Section 104 pooling
2. Deduct £3,000 annual exemption
3. Report on SA108 (Capital Gains pages)
4. Show disposal proceeds, allowable costs, and gains

Example Scenarios

Scenario 1: Kraken Staking

You stake 10 ETH on Kraken at 4% APY.

• Annual rewards: 0.4 ETH
• Average ETH price: £2,500

Tax treatment:

• Income tax: 0.4 × £2,500 = £1,000 at your marginal rate
• Basic rate (20%): £200 tax
• Higher rate (40%): £400 tax
• Section 104 pool: Add 0.4 ETH at £1,000 cost

Scenario 2: ETH Solo Validator

You run an Ethereum validator with 32 ETH.

• Annual rewards: ~1.2 ETH
• Rewards: Per-epoch (every ~6.4 minutes)
• Total income: ~£3,000 (at £2,500/ETH avg)

Tax treatment:

• Income tax: £3,000 at marginal rate
• Use crypto tax software to track thousands of micro-rewards
• Section 104 pool updated continuously

Scenario 3: Lido stETH

You stake 5 ETH through Lido (£12,500 value).

• Receive: 5 stETH (rebases daily)
• Annual rebases: ~0.2 stETH (4% APY)

Conservative tax treatment:

• Each rebase = taxable income
• Annual income: 0.2 ETH × £2,500 = £500
• Track daily or use software that auto-detects rebases

Record Keeping

HMRC requires records for at least 5 years after the 31 January submission deadline.

What to Track

• Date and time of each reward
• Amount in crypto
• GBP value at time of receipt
• Exchange/wallet used
• Transaction IDs for on-chain staking

Recommended Tools

• Koinly - Best for UK, Section 104 pooling
• CoinTracker - Good UK support
• TokenTax - HMRC-compliant reports

Common Mistakes

1. Not reporting staking as income: HMRC requires income reporting at receipt
2. Only reporting when sold: Income tax at receipt, CGT at sale (two events)
3. Wrong GBP valuation: Use price at time of receipt, not year-end
4. Ignoring Section 104 pooling: Must use pooled cost basis
5. Missing CGT allowance: First £3,000 of gains tax-free
6. Not tracking liquid staking rebases: stETH rebases likely taxable

FAQs

Do I pay tax twice on staking rewards?

No. You pay income tax when received (on the value) and CGT when sold (on appreciation only). The cost basis prevents double taxation.

Is staking income or capital gains?

Both: Income tax when received, capital gains tax when sold.

Do I need to register as self-employed for staking?

No, unless you're running a staking business. Casual staking is investment income.

What about locked staking rewards I can't access?

HMRC guidance suggests rewards are taxable when earned, even if locked. This matches IRS treatment.

Can I deduct staking expenses?

Only if running a staking business. Solo validators may deduct:

• Hardware (capital allowances)
• Electricity
• Internet

Casual exchange stakers cannot deduct expenses.

How do I report staking on Self Assessment online?

1. Log in to HMRC Self Assessment
2. Go to "Other UK income"
3. Enter staking rewards as "Other taxable income"
4. Provide description: "Cryptocurrency staking rewards"

What if I earn less than £1,000 from staking?

You may qualify for the £1,000 trading allowance and not need to report or pay tax on staking income under £1,000 (if you have no other trading income).

HMRC Resources

• CRYPTO22200: Staking rewards
• HMRC Cryptoassets Manual
• Self Assessment tax returns

Final Thoughts

UK staking tax is straightforward once you understand the two-event system: income at receipt, CGT at sale. The £3,000 CGT allowance provides meaningful relief for smaller portfolios, and Section 104 pooling simplifies cost basis tracking compared to FIFO/LIFO methods.

For stakers earning under £1,000/year, the trading allowance may eliminate tax obligations entirely. Higher earners should use crypto tax software to ensure accurate Section 104 pooling and HMRC-compliant reporting.