Crypto Income Tax UK: Mining, Staking, Airdrops & Employment
Complete guide to when crypto is taxed as income rather than capital gains in the UK. Rates, thresholds, and reporting requirements.
Not all crypto profits are subject to Capital Gains Tax. In several situations, HMRC treats crypto as income instead, which can mean higher tax rates but also different allowances and deductions.
When crypto is taxed as income
HMRC applies Income Tax rather than CGT in these situations: receiving crypto as salary or wages, mining cryptocurrency (whether hobby or business), staking rewards, airdrops received in exchange for services, bounties and referral rewards, interest earned from crypto lending (DeFi or CeFi), and employer-provided crypto bonuses.
Income tax rates 2025/26
The current UK income tax bands are: Personal Allowance (£0–£12,570) at 0%, Basic Rate (£12,571–£50,270) at 20%, Higher Rate (£50,271–£125,140) at 40%, and Additional Rate (over £125,140) at 45%. Crypto income is added on top of your other income (salary, pension, etc.) and taxed at whatever band it falls into.
National Insurance
If your crypto income comes from a trade (like a mining business), you also owe National Insurance contributions. Class 2 NIC is £3.45/week for profits over £12,570, and Class 4 NIC is 6% on profits between £12,570 and £50,270, plus 2% above that. This can add significantly to your tax bill compared to CGT.
The cost basis connection
When you receive crypto as income, the GBP value at the time of receipt becomes your cost basis for CGT purposes. This means you pay income tax when you receive it, and then CGT on any subsequent gain when you sell. You are not double-taxed on the same amount — the CGT is only on the increase in value after receipt.
Practical example
You earn 0.5 ETH per month from staking, and ETH is worth £2,000. That is £1,000/month of miscellaneous income — £12,000/year. This is added to your salary for income tax purposes. If your salary is £40,000, this extra £12,000 pushes some of it into the higher-rate band. Six months later, ETH rises to £3,000 and you sell all your staked ETH. Your cost basis is £2,000/ETH (the value when received), so your capital gain is £1,000/ETH.
Keep detailed records of the value at the time of each receipt — CryptoLens tracks this automatically when scanning your wallet.
Calculate Your Crypto Tax
Put this knowledge into action with CryptoLens — free to use, no sign-up required.
Open Tool →