The short answer: staking is taxed twice, in two steps
UK staking rewards are subject to two separate tax charges, in sequence. When your staking reward lands in your wallet, HMRC treats the sterling value at that moment as taxable income (miscellaneous income for most individuals, trading income if the activity rises to a trade). That receipt value then becomes your CGT base cost. When you later sell, swap, or spend those tokens, only the growth above the original receipt value is a capital gain. You are not taxed twice on the same amount, but you are taxed twice on two different things.
| Event | Tax type | Value used |
|---|---|---|
| Reward received | Income tax (miscellaneous or trading) | Sterling market value on the day received |
| Tokens later sold or swapped | Capital Gains Tax | Proceeds minus receipt value (the base cost carried from step one) |
This two-step framework is set out in CRYPTO21200 (staking) and CRYPTO21150 (mining, which follows the same logic).
Step one: income on receipt at sterling value
The moment a staking reward arrives in your wallet, you have received income. HMRC requires you to record the sterling market value at the date and time of receipt. That figure is your gross income for that reward and it goes into your Self Assessment for the tax year in question.
For most individuals staking on a centralised or liquid protocol, this is miscellaneous income under the rules at CRYPTO21200. If HMRC decides the activity amounts to a trade (see the miscellaneous vs trading section below), the same receipts are instead trading income, with different rules for losses and Class 4 National Insurance consequences.
The income tax rates that apply depend on your total income for the year: 20% (basic rate), 40% (higher rate), or 45% (additional rate) for rUK taxpayers. Scottish taxpayers face different intermediate and higher-rate thresholds and should confirm which band applies to them.
You must record enough information at receipt to reconstruct the sterling value later. Exchange records and on-chain data together are the minimum; many stakers find that dedicated crypto-tax software (such as Koinly or Recap) pulls this automatically, but the underlying data must exist in your records.
Step two: CGT on disposal, base cost equals the receipt value
When you later sell, swap, or spend those staking-reward tokens, you make a disposal for Capital Gains Tax. The allowable cost (base cost) for the disposal is the sterling value you already recorded as income at step one. This is why you are not double-taxed on the same value: the amount already charged to income tax is recognised as your acquisition cost.
The gain is therefore only the growth above the receipt value. If you received 1 ETH as a staking reward when ETH was worth £2,000, your income at step one was £2,000. If you later sell that ETH for £3,200, your capital gain is £1,200, not £3,200.
The CGT rates on crypto are 18% within your remaining basic-rate band and 24% on any gain above it. Higher and additional-rate taxpayers pay 24% on the whole gain. The basic-rate band ceiling is £37,700 of taxable income for 2026/27. A basic-rate taxpayer who has used most of their band on salary may find a large staking disposal mostly falls at 24%.
The Capital Gains Tax annual exempt amount is £3,000 for 2026/27. Active stakers who make multiple disposals across the year exhaust this quickly, particularly once crypto-to-crypto swaps are counted as separate disposals.
The tokens from your staking rewards sit in your section 104 pool for that token, alongside any other units of the same token you hold. When you dispose of some units, the allowable cost is the average cost of the pool at the time of disposal. If you also bought units of the same token at different prices, the costs blend together. See our same-day and 30-day rule guide for the ordering rules that override the pool.
The £1,000 allowance: it shelters the income leg, NOT the CGT leg
The trading and miscellaneous income allowance of £1,000 can mean that small staking receipts are exempt from income tax. If your total staking (and other miscellaneous or trading) income is below £1,000 in a tax year, you may not need to report or pay income tax on it at all.
However, the allowance does not touch the CGT position. As HMRC's guidance confirms, the £1,000 allowance operates only on the income leg. If you claimed the allowance and paid no income tax on a staking receipt, you still need to establish a base cost for those tokens when you come to dispose of them. The base cost is the sterling value at receipt (even if no income tax was charged), and any growth above it is a capital gain.
Confusing the allowance as clearing both legs is the most common staking tax error. The income may be covered; the later capital gain is not.
Worked illustration: receipt, income, disposal, CGT
Alice stakes ETH and receives rewards across the 2026/27 tax year. She is a basic-rate taxpayer with £25,000 of salary, leaving £12,700 of her basic-rate band unused (£37,700 band ceiling minus £25,000 salary).
Step one: income on receipt
| Date | Tokens received | Sterling value at receipt | Income recorded |
|---|---|---|---|
| 15 September 2026 | 0.5 ETH | £2,000 (i.e. £4,000/ETH) | £2,000 miscellaneous income |
| 20 January 2027 | 0.3 ETH | £1,350 (i.e. £4,500/ETH) | £1,350 miscellaneous income |
| Total staking income 2026/27 | £3,350 | ||
Alice's total income (£25,000 salary + £3,350 staking) is £28,350. The staking income is above the £1,000 allowance, so the full £3,350 is taxable at 20% (basic rate): an income tax charge of £670.
Her 0.8 ETH from staking enters her ETH section 104 pool at an average cost of £4,187.50 per ETH (total cost £3,350 / 0.8 ETH). Her total ETH pool at 5 March 2027 (before the disposal) comprises 2.8 ETH at an average pool cost of £3,900/ETH, blending earlier purchases with the staking receipts.
Step two: disposal and CGT
On 5 March 2027 Alice sells 1.5 ETH for £7,800 (£5,200/ETH).
| Item | Amount |
|---|---|
| Proceeds | £7,800 |
| Allowable cost (1.5 ETH at pool average £3,900) | £5,850 |
| Gross gain | £1,950 |
| Annual exempt amount (AEA) | £1,950 (covered, below £3,000 AEA) |
| CGT due | £0 |
In this scenario the £3,000 AEA covers the gain entirely. But note: the base cost used for the disposed ETH already reflects the staking receipt values blended into the pool. The income tax on the staking receipts and the CGT on the disposal are independent calculations on different amounts. If Alice had made larger gains or more disposals, the AEA would not have stretched and CGT at 18% (within remaining basic-rate band of £12,700) would apply.
If you want to estimate your own staking income position, our staking and mining income estimator covers the income leg for a given set of receipts. It does not compute the later CGT leg (which depends on your full disposal history and pool), and it ends at a prompt to discuss your situation with us.
Miscellaneous vs trading: when the activity tips into a trade
Most individuals who stake via a platform or liquid staking protocol receive miscellaneous income. This is the default position under CRYPTO21200.
HMRC can treat staking as a trade where the activity has sufficient organisation, scale, commercial intent, and a profit-seeking motive assessed against the badges of trade. This is uncommon for individual stakers but becomes more relevant for validators running significant infrastructure, or for businesses operating at scale.
Trader status is usually a worse tax outcome, not a better one. Trading profits are charged to income tax at up to 45%, plus Class 4 National Insurance (6% on profits between £12,570 and £50,270, 2% above). CGT at 24% compares favourably for most individuals. The common assumption that "trading" status is advantageous inverts the reality for the majority of cases.
The practical differences between miscellaneous and trading income for staking include:
- Trading income: losses can potentially offset other trading income and carry forward against future trading profits. Miscellaneous income: losses can only offset miscellaneous income of the same type in the same year or be carried forward against future miscellaneous income of the same category.
- Trading income: Class 4 NIC applies (additional cost). Miscellaneous income: no NIC.
- Trading income: accounting under the cash or accruals basis applies. Miscellaneous income: simpler receipts-based approach.
If you are staking at significant scale or running validator infrastructure, the miscellaneous vs trading question is worth reviewing with an adviser before you file. Our DeFi and staking hub sets out the hire intent in more detail.
A note on DeFi staking
Standard proof-of-stake staking (for example, staking ETH via a liquid staking token on a recognised platform) broadly follows the two-step described above. DeFi staking, liquidity provision, and yield-farming introduce a further complication that this page does not resolve.
Under HMRC's current view (CRYPTO61000), many DeFi deposits and liquidity-pool entries are themselves disposals of the original tokens, because beneficial ownership may transfer to the protocol. This is HMRC's current position, not settled law. The legislative framework consulted on in 2023 has not been enacted, and the analysis is transaction-specific and protocol-specific.
If you are depositing tokens into a DeFi protocol, lending platform, or liquidity pool, the disposal question on entry needs to be assessed for your specific protocol before you assume the simple two-step applies. Our DeFi lending and LP disposals guide covers this in detail.
Getting your staking records right
The two-step only works in practice if your records support it. HMRC expects you to be able to demonstrate the sterling value at receipt for every staking reward received, the date and time of receipt, and the subsequent disposal proceeds and dates.
Key record-keeping points for stakers:
- Download reward records from your staking platform or pull on-chain data. Exchange records and wallet history are both valid sources, but gaps in either create problems at enquiry.
- The sterling value at receipt should be the market price at that date and time, not an estimate or a month-end price. Crypto-tax software generally handles this by pulling exchange rates automatically.
- If your staking rewards enter your section 104 pool alongside bought tokens of the same asset, the blended average cost must be tracked accurately. Manually computing this across hundreds of reward events is error-prone; software helps significantly.
- If you claimed the £1,000 miscellaneous income allowance in a prior year and paid no income tax, you still need a record of the sterling value at receipt. That value is your base cost for CGT purposes when you eventually dispose.
- Self Assessment registration is required by 5 October after the first tax year in which you had reportable staking income or capital gains. Missing this deadline carries penalties.
From 1 January 2026, UK cryptoasset platforms are required to collect user and transaction data under the Cryptoasset Reporting Framework (CARF). The first report covering the 2026 calendar year is due to HMRC between 1 January 2027 and 31 May 2027. Staking reward data sits within the transaction data covered by this framework. If there are years of unfiled staking income in your history, the time to address them is before HMRC's data arrives, not after.
If your staking activity spans multiple tax years, involves DeFi protocols, or sits alongside a more active disposal history, the interaction between the income leg, the CGT leg, and the pool calculation becomes complex enough that a specialist review typically recovers more than it costs. Visit our DeFi and staking page or use the staking income estimator as a starting point, then speak to us about the full picture.