Liquid Staking Tax UK: stETH, rETH and cbETH Explained (2025/26)

Liquid staking has become the default way UK holders earn yield on Ether. Lido (stETH), Rocket Pool (rETH), Coinbase (cbETH) and Frax (sfrxETH) between them hold over a third of all staked ETH. The tax treatment is more nuanced than ordinary staking, and HMRC has not published a liquid-staking-specific guidance note — which means you have to apply the existing rules carefully.

Is depositing ETH for stETH a disposal?

This is the question that catches most people out. HMRC's position, drawn from their Cryptoassets Manual, is that swapping one cryptoasset for a "beneficially different" cryptoasset is a disposal of the first asset. Lido's stETH is widely treated as a disposal of ETH because you receive a new, distinct token with different rights, a different smart contract, and a different market price. The same logic applies to rETH and cbETH.

The practical implication: when you deposit 1 ETH and receive ~1 stETH, you have triggered a Capital Gains Tax event on the ETH at the GBP price at the moment of the deposit. Your acquisition cost for the stETH is that same GBP figure.

Rebasing income (stETH)

stETH is a rebasing token — your balance grows daily. Each rebase is treated by HMRC as miscellaneous income (or trading income if you are operating as a business), valued in GBP at the moment of receipt. This is identical to how ordinary staking rewards are taxed. You then have a fresh acquisition cost equal to that GBP figure, which feeds into your Section 104 pool.

Reward-bearing tokens (rETH, cbETH)

rETH and cbETH do not rebase. Instead, the token itself appreciates against ETH because the underlying staked balance grows. There is no income event during the holding period. The full gain (or loss) is realised on disposal — when you swap rETH back to ETH, sell it for GBP, or use it as collateral in certain DeFi positions. The total gain is then a pure capital gain.

Withdrawing — another disposal

Unstaking back to ETH is again a disposal, this time of the LST. You compare the GBP value at withdrawal to your Section 104 cost basis on the LST.

Keeping records

You need: the GBP value of every deposit, every rebase (for stETH), and every withdrawal. Most exchanges and wallets do not provide this in HMRC-ready form. A multi-chain scanner that pulls historical GBP prices for every event is the only realistic way to assemble this if you have been earning yield for more than a few weeks.

A worked example

You deposit 5 ETH at £8,000 total in May 2025 and receive 5 stETH. That is a £8,000 disposal of your ETH (compared to your Section 104 ETH cost basis). Your stETH acquisition cost is £8,000. Over the year, you accrue ~0.15 stETH in rebases, each valued in GBP at the time of receipt — totalling around £240 of miscellaneous income. In April 2026 you withdraw 5.15 ETH at £8,300. That is an £8,300 disposal of stETH against a Section 104 cost basis of £8,240, producing a £60 gain.

CryptoLens automatically detects stETH, rETH, cbETH and other LST positions across your wallets and tags every mint, rebase and unstake at the correct GBP value, so you can assemble a defensible record without piecing it together by hand.