Crypto + Digital Assets Tax → Income tax — mining, staking, airdrops

UK Income Tax on Crypto — Mining (CRYPTO21150) + Staking (CRYPTO21200) + Airdrops (CRYPTO22150 — Market Value at Receipt, NOT £nil)

Not every crypto receipt is income — but several are. HMRC's CRYPTO Manual sets out the framework: MINING (CRYPTO21150) is either a trade (apply badges-of-trade test from Marson v Morton [1986] 1 WLR 1343 / CIR v Livingston (1927) 11 TC 538 — organisation, frequency, intention, scale) → trading profits framework; OR miscellaneous income → taxed at receipt at sterling MV. STAKING REWARDS (CRYPTO21200) are typically miscellaneous income at sterling MV on receipt, with that MV becoming the base cost for CGT on subsequent disposal — avoiding double tax. UNCONDITIONAL AIRDROPS (CRYPTO22150) — received WITHOUT doing anything in return — are NOT income at receipt; the CGT base cost equals market value at receipt (NOT £nil; the £nil position only applies in the narrow case where no ascertainable market value exists at receipt — a correction worth flagging because acting on £nil would massively overstate the eventual CGT gain). CONDITIONAL AIRDROPS — received in return for service, social-media activity, sign-up, or other consideration — ARE income at receipt at MV, with that MV becoming base cost for CGT. HARD FORKS — typically not income; CGT base cost apportioned between original + new chain.

Last reviewed: 24 May 2026

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In plain English

Three different framings for three different receipt types, and getting the framing wrong has real money consequences. MINING — is it a trade? HMRC apply the badges-of-trade test. Hobbyist running one GPU at home in spare time: typically NOT a trade — miscellaneous income taxed at sterling MV at receipt. Industrial-scale operation: trade → trading profits + Class 4 NI + Trading Allowance election possible. The £1,000 Trading Allowance can be useful at the bottom — if gross mining receipts are under £1,000 in a year, no SA registration required AND no tax. Above £1,000, register + choose between deducting actual costs OR claiming the £1,000 allowance against gross. STAKING — HMRC's view (CRYPTO21200) is that staking rewards are typically miscellaneous income at sterling MV on receipt. The MV used as income then becomes the base cost for CGT on later disposal. Worked: you stake ETH and receive 0.1 ETH reward when ETH = £3,000 → £300 misc income today (income tax + maybe Class 4 NI if trading-scale); base cost of that 0.1 ETH for CGT = £300. Sell 6 months later for £400 → CGT gain £100. AIRDROPS — this is where the practitioner trap sits. UNCONDITIONAL airdrop (you held a token + got dropped, no action needed) is NOT income at receipt. But CGT base cost is MARKET VALUE AT RECEIPT — not £nil. Some early commentary said £nil, which would mean the entire later disposal proceeds become gain. That's WRONG except in the narrow case where the airdropped token had no ascertainable market value at the moment of receipt (e.g. first day of trading, no exchange yet listing). For any token with a published MV at receipt, that MV is your base cost. CONDITIONAL airdrops (you had to follow on Twitter / use the protocol / register / refer a friend) ARE income at MV on receipt + that MV is your CGT base cost. HARD FORKS — receiving 'free' tokens from a chain split. HMRC view (CRYPTO22200): typically not income. You apportion your original base cost between the original + new chain pro-rata to MVs at fork — a 'just and reasonable' apportionment.

How it works

Who this applies to + key conditions

• Hobbyist miners typically misc income (CRYPTO21150) — Trading Allowance £1,000 available; trading-scale operations apply trading-income rules + Class 4 NI
• Staking rewards taxed as misc income at sterling MV on receipt per HMRC view (CRYPTO21200) — including liquid-staking + delegated staking + pooled staking
• Unconditional airdrops: NOT income; CGT base cost = MV at receipt (NOT £nil unless no ascertainable MV)
• Conditional airdrops: income at MV on receipt + MV becomes CGT base cost
• Hard forks: typically not income; apportion pool cost pro-rata to post-fork MVs
• Trading Allowance £1,000 (ITTOIA 2005 ss.783A-783AR) covers gross trading + miscellaneous receipts — election against gross or deduct actual costs

Statute + manual references

Common mistakes + traps

• Treating unconditional airdrops as base cost £nil — wrong; MV at receipt is the base cost (unless no ascertainable MV)
• Treating staking rewards as non-taxable because 'no fiat realised' — HMRC view is misc income at sterling MV on receipt regardless
• Classifying organised industrial-scale mining as misc income to avoid Class 4 NI — badges-of-trade test applied objectively; mis-classification creates penalty exposure
• Forgetting subsequent CGT on disposal of mining / staking / airdrop tokens — income tax on receipt + CGT on later disposal both apply
• Missing the Trading Allowance £1,000 election option — below £1,000 gross can sit outside SA entirely (subject to no other SA trigger)
• Treating hard fork as income — HMRC view typically NOT income; apportion base cost pro-rata to MVs at fork
• Failing to record fair-and-reasonable sterling MV at the exact moment of receipt — software exports + on-chain timestamps essential

Worked example

How this connects to the rest of the framework

Free + regulated-body resources

• HMRC CRYPTO21150 — mining →

  Mining classification + badges of trade

• HMRC CRYPTO21200 — staking →

  Staking rewards = miscellaneous income at receipt

• HMRC CRYPTO22150 — airdrops →

  Unconditional vs conditional airdrops + base cost framing

• HMRC BIM20205 — badges of trade →

  Trade vs investment test

• BAILII — Marson v Morton [1986] →

  Badges-of-trade authority

Last reviewed: 24 May 2026