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Lending Rewards

What is a Lending Reward?

Lending rewards are received in exchange for loaning out a cryptoasset.

How are Lending Rewards Taxed?

There is no HMRC guidance on lending rewards, so you would need to examine the details of the transactions you are undertaking to determine the tax treatment.

Income Tax

Following HMRCโ€™s tax treatment of staking, it seems clear that lending rewards will be taxable as miscellaneous income, subject to income tax.
The sterling value of the rewards (usually cryptoasset tokens) at the date of receipt will be the value of the taxable miscellaneous income.
If the taxpayer is a โ€˜financial traderโ€™ in cryptoassets these rewards may be treated as trading income rather than miscellaneous income.

Capital Gains Tax

The sterling value of the reward at the date of receipt is the capital gains tax acquisition cost of the tokens; to be deducted from the proceeds of a later disposal of the tokens (which is subject to capital gains tax).

Lending Rewards in Recapโ€‹

Last modified 3d ago