NFT tax in the UK turns on one question: are you creating or flipping? Creating and selling your own NFTs, and earning ongoing royalties, is likely to be income from a trade or profession. Buying and reselling NFTs you did not create is usually CGT on each disposal. These are two different tax pictures, and getting the split wrong, treating creator income as a capital gain or ignoring flip-on-flip CGT, is the most common error. Both sides carry their own reporting obligations.
HMRC draws the line using the badges of trade. Creating NFTs and selling them, especially as an ongoing activity with a commercial purpose, is likely to be trading or professional income taxed at your marginal rate. Buying existing NFTs and reselling them is usually CGT. There is no bright-line frequency threshold; the classification is a facts-and-badges judgment, and borderline cases need a documented opinion, not a guess.
Selling an NFT for crypto, swapping one NFT for another, or spending an NFT on goods or services are all disposals at the sterling market value at the time of the transaction. The £3,000 annual exempt amount is shared across all your CGT disposals in the year, and active flippers typically exhaust it in the first few transactions.
Ongoing royalties from NFT sales are income, not capital gains. The tax treatment depends on whether the creator is trading (which puts the income in trading profits) or acting in a professional capacity. The £1,000 trading and miscellaneous income allowance may shelter very small receipts from income tax, but it does not remove CGT on any tokens received as payment.
Capital losses on flips must be claimed, normally within four years of the end of the tax year they arose. Where an NFT collection becomes genuinely worthless (a rug pull, a dead chain) a negligible value claim may crystallise a loss without a sale. A price crash alone is not enough; the asset must be genuinely worthless. Exchange or marketplace collapse is fact-specific and no deduction can be promised.
We assess your NFT activity against the badges of trade and produce a written classification that supports your Self Assessment position. We handle the mixed case (creator and flipper in the same year) and the royalty income leg separately from the disposal leg. Borderline positions are flagged honestly, not resolved with false certainty.
We account for every disposal: sales, NFT-for-NFT swaps, NFT-for-crypto exchanges and spending events. We apply s104 pooling at average cost where it is relevant, calculate the gain on each transaction in sterling, and offset the annual exempt amount and any available losses correctly.
We identify unclaimed loss years, prepare and submit negligible value claims for genuinely worthless collections, and assess rug-pull and marketplace-collapse scenarios on the specific facts. Unclaimed capital losses are recoverable value; we find them across open years before the four-year window closes.
Tell us about your nft creators and flippers situation and we will reply within 24 hours.