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Reflections Rewards

What are Reflections Rewards?

In general, โ€˜reflectionsโ€™ tokens appear to pay the holder a reward (more of the same token) every time someone else makes a transaction in that token. The tokens are pre-determined to pay out this reward to holders (usually referred to as a tax on transactions).

Income Tax

It is most likely HMRC will treat the rewards as non taxable airdrops, rather than taxable miscellaneous income. This is on the basis that nothing was done by the holder in order to receive the reward.
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 tokens at the date of receipt becomes the capital gains tax acquisition cost of the tokens; to be deducted from the disposal proceeds of a later disposal of the tokens (which is subject to capital gains tax).
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Last modified 3d ago