Income Tax
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Some returns derived from cryptoasset activity are treated as income, rather than capital gains. For example trading, mining and most staking/lending rewards are treated as income. See our further guidance on whether a staking/lending reward is considered as
Income is taxed in different ways, depending on the type of income and the activity undertaken to generate it.
Consider our detailed guidance below to check if you are an investor or a trader.
If you are a trader, look at our detailed guidance on what impact this has on your tax position.
Allowable expenses and possibly the trading allowance can reduce the taxable income.
See our detailed guidance below on Miscellaneous Income and allowable expenses
If paid in cryptoassets the sterling equivalent at the date of receipt is taxable employment income, subject to income tax and national insurance contributions. In most cases the cryptoassets are Readily Convertible Assets (RCAs), which means the employer needs operate PAYE on the employment income.
HMRC state that employees need to receive an actual sterling payment for National Minimum Wage (NMW) purposes and are also clear that cryptoassets are not money. To avoid a NMW underpayment, employer’s should consider paying part of an employee’s salary in fiat sterling to cover NMW for their hours worked.
See our detailed guidance on employment income and NMW.
The Recap Income pdf report provides details of all cryptoasset income to be included on your annual Tax Return. The intention is that you pass our report to your accountant and they will be able to complete the Tax Return and advise on your tax position, based on your specific circumstances.
Anyone who buys and sells or mines cryptoassets, needs to first consider if they are engaged in financial trading in cryptoassets, rather than simply assuming they are classed as an investor. Also, in some cases profits or losses arising from may be treated as financial trading income.
Individuals who are classified as are required to pay income tax and national insurance on their profits, rather than capital gains tax on their capital gains and income tax on their miscellaneous income. Therefore, being classified as a trader rather than investor usually results in a higher tax bill.
Where there is no in cryptoassets, income derived from mining, and most staking and lending rewards will be treated as Miscellaneous Income (called Other Taxable Income on the tax return) and subject to income tax. See our further guidance on whether a staking/lending reward is considered as
The rate of income tax will depend on the total income in the tax year. See for more info on the tax rates. There is no national insurance charge on Miscellaneous Income.
In some cases profits or losses arising from may be subject to income tax and treated as miscellaneous income.
