💎On Receipt of Income Reward

Tax position for lender/staker where INCOME REWARDS received and there is NO transfer of beneficial ownership

• Cryptoasset tokens received as an income reward are taxable as miscellaneous income when received; subject to income tax but not national insurance. The taxable income is the sterling market value of reward tokens at the date of receipt.

• Cryptoasset tokens received as an income reward are excluded from the capital gains calculations needed at the time of locking away the principal tokens and at the time the principal is returned.

• Acquisition cost of the tokens received as an income reward is the sterling market value of the tokens received, at the date of receipt.

• Income reward tokens are subject to capital gains tax in the future when they are disposed of, based on the appreciation or depreciation in value between acquisition and disposal.

See our Example 1B illustrating the tax position at each point in the lifecycle of staking tokens where there is NO transfer of beneficial ownership and income rewards are received.