NFT Tax in the UK: How HMRC Treats Non-Fungible Tokens

NFTs (Non-Fungible Tokens) have their own set of tax considerations. HMRC treats them similarly to other crypto assets, but with some important nuances around creation, royalties, and gaming.

Buying and selling NFTs

When you buy an NFT, the cost (including gas fees) becomes your cost basis. When you sell it, the difference between the sale proceeds and your cost basis is a capital gain or loss. This is straightforward — the same CGT rules apply as for other crypto assets, including the £3,000 annual exemption and 18%/24% tax rates.

Minting NFTs

If you are an NFT creator, minting and selling your own NFTs is likely treated as trading income rather than capital gains. This means the proceeds are subject to Income Tax and National Insurance, but you can deduct costs like platform fees, gas fees for deployment, and the cost of creating the artwork. The distinction between trading and investment depends on frequency, scale, and intent.

Royalties

Many NFT platforms pay creators ongoing royalties when their NFTs are resold. These royalties are treated as miscellaneous income (or trading income if you are a professional creator). They are taxed at your income tax marginal rate, not CGT rates.

Swapping crypto for NFTs

When you use ETH to buy an NFT, you are disposing of ETH — which is a taxable event for the ETH. Your cost basis for the NFT is the GBP value of the ETH at the time of purchase (including gas). Many people forget that buying an NFT with crypto triggers two tax events: the disposal of the crypto used to pay, and the future disposal of the NFT itself.

Gaming NFTs

NFTs earned through play-to-earn games are generally treated as miscellaneous income at the point of receipt. Their GBP value at receipt becomes your cost basis. Selling them later triggers CGT on any change in value. If gaming is your primary activity and source of income, HMRC may treat it as a trade.

Record keeping

For each NFT, record: the date acquired, the purchase price in crypto and GBP, gas fees, the platform used, the date sold (if applicable), and sale proceeds. CryptoLens tracks your NFT portfolio across Ethereum, Polygon, and Solana automatically.